Stock and bond sell-off, BTC holds the 70,000 level, Bitcoin outperformed gold this week

The US and Israel’s military actions against Iran have entered their sixth day. Due to soaring oil prices and increased bond sell-offs, US stocks and Bitcoin have declined again. Bitcoin briefly reached $74,000 the day before but then fell, with yesterday’s low at $70,645. However, for most of this week, cryptocurrency traders have appeared more optimistic than investors in stocks and gold.

Disrupted energy supply pushes oil prices higher

The war between the US and Israel against Iran has disrupted major oil pipelines supplying key consumer countries worldwide. US crude oil prices remain high at around $81 per barrel. China, the world’s largest oil importer, has begun implementing fuel-saving measures to cope with supply uncertainties. Facing significant increases in oil and gasoline prices, US Secretary of the Interior Doug Burgum said the government is evaluating multiple policy tools to stabilize energy price fluctuations. If such geopolitical conflicts persist, they could increase operational costs for energy-dependent industries and potentially reduce consumers’ disposable income.

Inflation expectations rise, stocks and bonds both decline

Rising energy prices have directly heightened market concerns about inflationary pressures, causing the US 10-year Treasury yield to rise for four consecutive trading days. Investors worry that persistent oil prices will cause inflation to rebound, limiting the Federal Reserve’s room to cut interest rates. Richmond Federal Reserve Bank President Tom Barkin stated that the Fed’s response to the war will depend on how long its economic impact lasts.

Morgan Stanley strategist Serena Tang said that rising oil prices increase the risk of simultaneous declines in stock and bond prices. In traditional asset allocation, bonds are usually seen as a tool to diversify stock risk; however, amid supply-side inflation shocks, markets could repeat the stock-bond sell-off seen from 2021 to 2023.

Bitcoin outperforms gold this week

Bitcoin briefly reached $74,000 the day before but then declined, with yesterday’s low at $70,645. Throughout most of this week, cryptocurrency traders have been more optimistic than investors in stocks and gold.

After months of capital outflows, the US-based Bitcoin ETF has seen over $1.1 billion in inflows since March, with $462 million flowing in just on Wednesday.

In recent days, Bitcoin has outperformed gold, despite often being compared to it. Over the past five days, gold prices have fallen nearly 2%, while Bitcoin has risen 5%.

Crypto analyst Sylvain Olive noted that other digital assets have shown relative resilience amid geopolitical turmoil, aside from Bitcoin. In a report for CryptoQuant on Thursday, Olive pointed out that an indicator called Total 3 (representing the total market cap of all altcoins excluding Ethereum) has grown about 12% since early February.

“Given the ongoing fragility of the global environment, this progress remains noteworthy. In such uncertain conditions, cautious investment choices and reliance on emerging market signals are crucial.”

This article, “Stocks and bonds both decline, BTC holds above $70K, Bitcoin outperforms gold this week,” first appeared on Chain News ABMedia.