Bitcoin price is ‘outperforming equities’ due to three reasons, analyst says

Bitcoin is holding steady despite the turmoil of the war in the Gulf, but analysts warn that the price’s strength relies on three factors.

The top cryptocurrency is trading around $71,000 as the Iran war enters its fourth week, some 43% below its $126,000 October all-time high.

Bitcoin is “demonstrating resilience in the face of a genuine macro shock,” Rachael Lucas, crypto analyst at BTC Markets, told DL News.

Lucas notes that Bitcoin has gained roughly 7% since hostilities began, “outperforming equities, gold, and silver.”

Her comments come as Bitcoin and the rest of the crypto market have lost almost half of their volume since the October wipeout. Yet, she warns that things could get worse.

If Bitcoin falls below $67,500, that suggests more short-term weakness, with $59,000 seen by traders as the key long-term support level, meaning it could act as a price floor if markets drop, Lucas warns.

Bloomberg Intelligence Strategist Mike McGlone warned in February, before the outbreak of the war, that Bitcoin could slump as low as $10,000 this year.

If Bitcoin stays above $73,000, it shows the price is breaking out higher from its March trading range, Lucas says.

Polymarket punters give Bitcoin’s price a 70% chance of slipping below $55,000 and a 77% chance of hitting $80,000 in 2026.

Here are three factors seen to drive the price.

Iran war

The escalating conflict in the Middle East is a key driver behind Bitcoin’s price.

Paul Howard, senior director at the high-frequency market maker Wincent, sees the cryptocurrency market absorbing shocks rather than succumbing to it.

“The short term volatility provides many trading opportunities for those in the market and supports both our short and long term theses,” Howard told DL News.

The situation is not just wreaking havoc in crypto markets. Oil rose to $103 a barrel after Iran rejected Trump’s assertion of “very good and productive” conversations, calling it an attempt to manipulate financial markets.

Tehran’s Revolutionary Guards described the remarks as “worn-out psychological operations.”

Investors should be highly cautious about any chatter on peace talks because “it’s not clear that anyone is actually in control of Iran since so many of its leaders have been assassinated,” wrote Ed Yardeni, president of Yardeni Research.

The Federal Reserve

“The single biggest drag on Bitcoin’s recovery is the Federal Reserve,” Lucas told DL News.

While the US central bank has signalled that it still plans to cut interest rates this year, those cuts will likely be delayed as elevated oil prices keep inflation hot. Lower interest rates are usually seen as a boon to risk-on assets like cryptocurrencies.

Just a few weeks ago, traders priced in that the Fed would slash interest rates at its June meeting. Now they don’t just expect it to hold, but are giving it a 13% chance that the central bank will hike rates, according to the CME FedWatch tool.

Then there’s the question of Jerome Powell.

The Fed chair is set to end his term in May. However, an ongoing legal standoff between the Trump administration and the central bank has increased the risk that Powell’s successor, devoted Donald Trump nominee Kevin Warsh, won’t be confirmed until Powell is set to step down.

If that happens, Powell has hinted that he may stay in charge of the central bank, citing both legal and historical precedent for him to do so.

Institutional interest

Despite the market turmoil, institutional interest in Bitcoin and blockchain remains strong.

Investors have ploughed almost $1.6 billion into Bitcoin exchange-traded funds since the outbreak of the war, according to DefiLlama data — and they have more to give.

Grayscale estimates less than 0.5% of US advised wealth is currently in crypto, leaving a significant runway ahead,” Lucas said.

Moreover, traditional financial players are also tapping into digital ledger technology at scale across the world, which is seen to ultimately benefit Bitcoin too.

Over the past month alone, BlackRock CEO Larry Fink has repeated his belief in the power of tokenisation to transform the world economy, Mastercard has acquired stablecoin infrastructure startup BVNK and launched a partnership programme for over 100 players in the crypto industry, and the S&P 500 debuted on Hyperliquid, the decentralised crypto exchange that has also become a hub for off-hours oil perpetuals trading.

Eric Johansson is DL News’ managing editor. Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email them at eric@dlnews.com and lance@dlnews.com.