Markets are positioning for a prolonged Middle East conflict, stagflation, and forced Fed rate hikes. This scenario is triggering a correction in equity indices, a surge in US Treasury yields, and sell-offs in gold. In this environment, Bitcoin is faring better than the assets listed above, though it clearly loses out to the US dollar as a primary safe haven.

Performance of bonds, gold, and BTC

In truth, the cryptocurrency has never been a truly reliable safe-haven asset. However, the growing role of institutional investors in token markets is reducing volatility and raising doubts about Bitcoin's pure "risk asset" label. Had conditions remained unchanged, BTC/USD would likely have collapsed alongside the Nasdaq Composite after it entered correction territory.

Bitcoin accounts for 60% of the $2.3 trillion crypto market cap, while Ether holds about 10%. Both tokens have fallen roughly 50% and 60% from record highs, respectively. Still, roughly $1.4 billion flowed into Bitcoin-focused ETFs in March. By contrast, Ether-focused ETFs have faced significant outflows in recent days.

Dynamics of capital flows into Ether ETFs

Extremes dominate the derivatives market. The largest open interest is concentrated in options with strikes at 140,000 and 20,000. Traders expect that once Bitcoin leaves its current mid-term consolidation range of 63,000–75,000, a large explosive move—either up or down—will follow.

Risks are roughly balanced and largely hinge on the duration of the Middle East conflict. History shows that US equity drawdowns caused by wars were not as deep as feared, and recoveries have been swift, comparable to the S&P 500 rally following the April 2025 Liberation Day dip.

Wars always end at the negotiating table, but this one risks dragging on. Donald Trump is reportedly seriously considering a ground operation to seize uranium facilities or Kharg Island, where much of Iran's oil infrastructure is concentrated. In the latter case, we should expect a sharp rally in Brent and WTI, which would be highly unfavorable for risk assets.

Thus, Bitcoin's consolidation continues and signals uncertainty over the outcome of the Middle East confrontation. Donald Trump talks up productive negotiations and claims that Tehran has made concessions and met most of the 15 demands. Iran denies talks are taking place. Time will tell who was telling the truth.

Technically, BTC/USD is forming an expanding wedge pattern on the daily chart. Completion of the pattern would require a drop below 63,000. While Bitcoin trades below an estimated fair value of $70,400, it makes sense to focus on short positions.