Bitcoin Outperforms Stocks as Asian Markets Swing on Iran Strikes

Asian markets fell sharply on Monday with the fallout of the US and Israeli military strikes on Iran, as oil jumped, stocks fell, and investors ran to safe havens – but Bitcoin held up more than expected, trading around $66,500 after a weekend that saw fluctuations between $63,000 and $68,000.

With the Strait of Hormuz effectively closed and Brent crude rising as much as 13%, the battle is now on to test whether Bitcoin’s 24-hour liquidity is a shock absorber in crises or just another risk asset caught in a bearish tailspin.

Asia opens lower, then trims losses

Japan’s Nikkei fell as much as 2.15% at the open, losing more than 1,260 points. At noon, the decline had narrowed to 1.66%, trading at 57,875. The Hang Seng Index in Hong Kong fell 2.54%, and the Straits Times Index in Singapore fell 2.13%. Shanghai fared better, with a slight drop of just 0.45%.

Shares of airlines in the region – Qantas, Singapore Airlines and Japan Airlines among them – fell more than 5% as the closure of Hormuz disrupted flight routes and increased fuel costs. Chinese airlines have also been hit hard.

Oil’s early rally saw a sharp decline during the session. Brent crude jumped as much as 13% at the open, but WTI was only up 4.24% at midday. US stock index futures also recovered, with the S&P 500 down 0.67% and the Dow down 0.71% – well off the lows of more than 1%. Gold rose by 1.76%.

China’s energy sector bucked the trend. PetroChina opened 7% higher in Shanghai, and the CSI Energy Index jumped 5%. South Korea’s Kospi, one of Asia’s best-performing markets this year, will remain closed on Monday due to a national holiday – postponing a potentially strong market reaction until Tuesday.

Bitcoin fell 2.2% on the day, but outpaced losses in stock futures and major Asian stock indexes.

A wild weekend for cryptocurrencies

The unrest began on Saturday when the United States and Israel carried out targeted attacks on sites across Iran, killing Supreme Leader Ayatollah Ali Khamenei. Bitcoin has fallen Under $64,000 In a few hours, with the cryptocurrency market as a whole losing almost $128 billion in value, with forced liquidations in the derivative markets.

The recovery came soon. After Iranian state media confirmed Khamenei’s death, traders bet the power vacuum could accelerate de-escalation, pushing Bitcoin above $68,000 in thin liquidity on Sunday. But optimism was dashed when Iran launched retaliatory missile and drone strikes in the Gulf, targeting sites in Israel, the United Arab Emirates and Bahrain, bringing the price below $66,000 on Sunday night in New York.

On Monday morning in Asia, Bitcoin was trading around $66,543, in a 24-hour range between 65,149 and 68,043. The 24-hour trading volume exceeded $43.6 billion, reflecting increased activity as traders repositioned ahead of the US market open.

Hormuz: The real danger

Consider that the biggest market risk is the physical closure of the Strait of Hormuz. About 20% of the world’s marine oil passes through this waterway. Digital signals indicate that tanker traffic has almost stopped. At least three ships were attacked near the entrance to the Persian Gulf. Economists have warned that the continued shutdown could push oil prices to $108 per barrel.

OPEC+ on Sunday announced a production increase of 206,000 barrels per day starting in April – exceeding analysts’ expectations – to try to calm concerns about supplies. Saudi Arabia, Russia, Iraq, the UAE and four other members are preparing to increase production. But analysts warned that the move may provide only limited relief. If Gulf flows remain limited, additional production increases will not mean much. Export routes are more important than nominal production targets.

The oil crisis creates a double threat for cryptocurrencies. Higher energy prices directly increase inflation expectations, which could delay Fed rate cuts that the market has been counting on. Even with the intervention of OPEC +, the ongoing unrest in Hormuz could keep oil prices high enough to raise the inflation reading, which is negative for riskier assets, including Bitcoin.

Pressure valve or risky asset?

The weekend underlined the evolution of Bitcoin’s identity in geopolitical crises. When traditional markets close, cryptocurrencies absorb the selling pressure that comes from stocks, bonds and commodities. Analysts call this the “pressure valve effect.” Bitcoin is the only large liquid asset that trades around the clock. It bore the brunt of risk flows at the end of the week. The true price discovery is expected on Monday when the US stock markets and Bitcoin ETFs reopen.

Add a new variable, Bitcoin ETF Dynamics. Bitcoin spot funds attracted net inflows of nearly $254 million in three sessions last week. Monday’s opening could test whether institutional incumbents hold their positions despite escalating geopolitical turmoil.

Bitcoin futures funding rates have posted a sharp negative turn, with the CMC Crypto Fear and Greed Index reaching 15 – in “extreme fear” territory for weeks. Some analysts see this as a contrarian signal, saying that the market pushes traders to buy short.

What is the next step?

The initial panic subsided after President Trump told the New York Times that he was open Lift sanctions on Iran If the new leadership proves its pragmatism. A senior White House official also said For the press The new interim Iranian leadership has expressed its desire for dialogue, and Trump has said he agrees to engage with them.

Some Wall Street strategists have warned against buying too quickly during a downturn. This event risks exceeding the geopolitical tensions that investors are used to.

For Bitcoin, which is already down 47% from its October high of $126,000, the support level at $60,000 remains the dividing line. A break below this level could open the way to the mid-$50,000 region. On the other hand, a sustained move above $70,000 can trigger a wave of short covering due to the large accumulation of short positions in the derivatives markets.

The cryptocurrency market is poised to face pivotal hurdles with the release of CPI data on March 11 and the Fed’s decision on March 18 – challenges that the Iranian conflict has made much more difficult to navigate.