BIT RESEARCH: WHY DID BITCOIN START TO WIN TRADITIONAL ASSETS WHEN GEO-CONFLICTS ESCALATED

The market is currently in a geopolitically dominated phase of macro-pricing. The situation in Iran is escalating, increasing uncertainty about energy supply, inflation paths and global growth prospects. Markets had previously been expected to trade more liberal policies, but as the risk of spillovers from conflict increased, the interest rate tempo had begun to be reassessed and even factored into the policy path of more hawks。

In terms of current pricing, the market still tends to view the current round of shocks as a gradual inflationary disturbance, implicitly assuming that the effects at the energy and shipping levels are relatively manageable and will be mitigated within a reasonable time. However, as risks continue to accumulate, the linkages between energy, interest rates and risk preferences are becoming stronger, and macroeconomic narratives are shifting from “short-term inflation shocks” to “potential growth shocks”. In the process, Bitcoin's performance began to show structural characteristics different from those of traditional assets。

Inflationary shocks leading pricing: reshaping risk asset performance with energy and interest rates

During the first phase of the current round of shocks, the core driving force remains inflationary pressures resulting from the upward trend in oil prices. Higher Brent crude oil prices are pushing up inflation expectations and tightening financial conditions to suppress risky assets. At this stage, both equities and bitcoin are difficult to avoid completely。

But there is a key difference between Bitcoin and traditional risk assets: Its prices had previously experienced a marked fall, and the potential for passivity in the market was relatively limited. This “location advantage” makes it more resistant to pressure under the same macro shocks. At the same time, in a high oil price environment, real interest rates remain high and the opportunity costs of gold rise, while Bitcoin does not have physical holding costs, thus gradually gaining advantage in relative comparisons。

As the shock continues, the market is likely to enter a second phase of transition from inflation to growth concerns. Weaknesses in industrial goods such as copper are beginning to reflect the stifling of demand and weak global growth expectations. At this stage, the purely inflationary logic will no longer be sufficient to explain market trends and macro-pricing frameworks will begin to change。

From growth concerns to policy responses: liquidity expectations or key variables

If the shock continues further, the market rate enters phase III, the policy response phase. When growth pressures increase and financial conditions continue to tighten, policymakers often intervene through fiscal or monetary instruments, including price controls, subsidies or broader liquidity releases。

The key change in this phase is that market pricing will shift from “inflation-led” to “liquidity-driven expectations”. Historical experience has shown that in an environment of renewed liquidity, bitcoin tends to benefit from its non-sovereign asset attributes and to show greater flexibility。

At the same time, the structure of global capital flows is changing. Since the Russian central bank's reserves were frozen, market confidence in the “neutrality” of reserve assets has been shaken, and resource-exporting countries are adjusting their asset allocation structures from US debt and US equity to gold and other assets. This change has further complicated the macro environment by reducing global liquidity and pushing long-term interest rates. Against this background, the relative performance of Bitcoin depends not only on risk preferences, but also on its location in the liquidity cycle. The comparative advantage of bitcoin may be strengthened once the market begins to take into account the expectations of policy easing。

Overall, the evolutionary path of the current round of macro-shocks is moving from “oil price-driven inflationary shocks”, to “growth shocks under energy constraints” and, ultimately, to a “policy intervention-led liquidity phase”. In the process, traditional assets are under double pressure from interest rates and growth, while Bitcoin is showing relative resilience as a result of having previously completed a certain degree of price adjustment and being more sensitive to liquidity。

For investors, the key at this stage lies not in short-term fluctuations per se, but rather in the identification of the macro narratives. Once markets move from the logic of inflation to that of liquidity, bitcoin may move from passive underwriting of assets to a relative beneficiary in a new round of pricing。

 

Part of the above is from BIT on Target,Contact usGet the full BIT on Target report。

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