Why is Bitcoin recovering while the Middle East conflict jolts global markets?

Bitcoin and the broader crypto market have emerged as relative winners since the outbreak of the Iran conflict, standing out against a backdrop of rising geopolitical and macro uncertainty. 

BTC briefly pushed above the key $75,000 level during the Asian session, bringing gains since the start of the conflict to nearly 14%. Prices have since eased slightly but remain elevated near $74,000 at the time of writing. 

This resilience marks a sharp shift from the previous trend, in which Bitcoin fell sharply from its October peak of $126,000, losing roughly half its value over four months. 

A different reaction to macro stress 

The current rally is notable given the broader market environment. Geopolitical tensions in the Middle East have pushed oil prices up by around 40% to above $100 per barrel, while global equities have declined and Treasury yields have risen. 

Normally, this combination — higher oil, rising yields, and falling equities — would weigh heavily on risk assets such as Bitcoin. However, BTC has held firm and even rallied. 

This divergence suggests that Bitcoin may be starting to behave differently in periods of macro stress. Rather than falling alongside other risk assets, it is showing signs of resilience as institutional and corporate demand absorb supply. 

Institutional demand and positioning shift 

Flows into crypto support this view. US-listed Bitcoin ETFs have recorded roughly $1.5 billion in inflows so far this month, according to SoSoValue data. Ethereum ETFs have also seen three consecutive weeks of net inflows, with ETH climbing back above $2,300. 

Interestingly, this demand has come despite sentiment indicators remaining weak. The Fear & Greed Index remains in “extreme fear,” suggesting that retail investors remain cautious even as institutional capital returns. 

In other words, while retail positioning appears defensive, larger investors are accumulating. 

Additional support has come from derivatives markets. Traders who had positioned for Bitcoin to fall below the $55,000–$60,000 range have begun unwinding those positions. As these downside hedges are closed, selling pressure has eased, helping support the recent rally. 

From recovery to momentum 

What initially appeared to be a relief bounce is increasingly looking like a structurally supported recovery. With institutional inflows building and downside positioning unwinding, the rally is beginning to gain momentum. Whether it can sustain a breakout from its recent range remains to be seen. 

What comes next? 

Attention now turns back to the macro outlook, with the Federal Reserve rate decision due tomorrow. The Fed is widely expected to keep interest rates unchanged at 3.5%–3.75%. 

The focus will be on updated projections and the dot plot to gauge how policymakers assess the impact of higher energy prices and geopolitical risks on inflation and growth. 

Markets are currently pricing in one rate cut later this year. However, a more hawkish Fed — particularly one that signals no cuts — could push yields higher and weigh on Bitcoin in the near term 

BTC technical analysis 

The longer-term BTC picture remains bearish as the price trades below its multi-month falling trendline and 200 SMA. However, this could shift to a bullish trend if BTC extends its recent breakout. 

BTC has broken out of its recent 65k-71k range, pushing above the 74k March before running into resistance at 76k, the 23.6% Fib retracement of the 126k high and the 59.5k low. The price has eased back slightly to 74k. 

Buyers, supported by the rise above the 50 SMA and the RSI above 50 will look to rise above 76k to extend gains towards 80k, the round number, the November low, and the falling trendline. Above here, 85k comes into focus, the 38.2% Fib retracement. A rise above here puts the longer-term bias on a firmer footing. 

Support is seen at 71k, the 50 SMA. A break below 65k will bring 60k into focus, extending the longer-term bearish trend.