Bitcoin's wartime rally

Bitcoin jumped 7.3% today, climbing back above $73,000 after briefly dipping to $63,000 last Saturday.

At first glance, the rally seems counterintuitive. Bitcoin is typically viewed as a high-beta, risk-on asset, the kind that should struggle during geopolitical turmoil. So why is it rising?

• Policy tailwinds: In a post on Truth Social yesterday, President Trump pushed banks to soften their stance on stablecoin yield rules, a key hurdle in Congress’s debate over the Clarity Act.
• Fresh capital flows: On Monday, US spot bitcoin ETFs pulled in $458 million in one day with zero outflows, one of the largest daily totals seen so far this year, and a clearly bullish sign.
• The “digital gold” narrative: Some investors still frame bitcoin as a hedge against instability, though recent performance complicates that claim. Since peaking above $126,000 in early October, bitcoin has fallen roughly 45%, while gold has gained about 30% over the same stretch.
• Positioning and price reset: After such a sharp selloff, much of the speculative excess may already be washed out. With sentiment low and positioning lighter, even small catalysts can drive a rebound.

Iran’s $7.8 billion crypto market

While bitcoin may trade like a risk asset in developed markets, it plays a much different role in economies under strain. In countries dealing with sanctions, currency instability, and now military escalation, digital assets offer an alternative to fragile domestic financial systems.

Iran is a clear example. Years of pressure on the Iranian rial have eroded purchasing power, pushing individuals and institutions to look for dollar-linked alternatives. Over the past year, the country’s central bank reportedly accumulated more than $500 million in dollar-backed digital assets.

Now that the war is escalating, Iranians are moving assets out of local crypto exchanges. Crypto analytics firms Chainalysis and Elliptic reported that about $2.3 million exited platforms in the peak hour after airstrikes earlier this week—nearly nine times normal levels—with withdrawals from the largest cryptocurrency exchange in the country, Nobitex, jumping around 700%.

However, while there are sharp swings in local crypto activity, the volumes are far too small to materially impact global prices, where hundreds of billions of dollars trade daily.

What comes next?

Whatever is driving the rebound, the lift is spreading across the ecosystem: Strategy gained 10.37%, Coinbase rose 14.57%, Galaxy Digital climbed 17.7%, and Robinhood rallied 8.07%.

Still, don't pop the champagne just yet. Analysts are worried that bitcoin still hasn't hit rock bottom, and that volatility in the stock market could translate to more selloffs in the crypto market.—SY