From Gold to Bitcoin: Markets Signal Risk-On Despite Ongoing Geopolitical Tensions

Chart of the Week

Investors have rotated out of gold into bitcoin

Performance

Last week cryptoassets outperformed major assets like equities in a broad risk-on rally amid ongoing geopolitical tensions in the Middle East that continue to dominate the news flow.

Although the US and Iran have not agreed on a ceasefire yet there already appears to be a slight improvement in ship crossings in the Strait of Hormuz at the margin which has improved global risk appetite already.

At the time of writing this report on Tuesday morning, Bloomberg data show 4 commercial vessel crossings on a 24-hour rolling basis – which is slightly up from late March – when almost no official crossings took place.

This may be due to the new toll system implemented by the Iranian government that allows for a safe passage of commercial vessels for a fee. Interestingly, according to Bloomberg, the Iranian government appears to accept Chinese Yuan and stablecoins for its toll payments only. Regardless of whether this is a sustainable solution for the long term, this has slightly eased market concerns over an intensifying supply deficit of energy commodities.

In this context, it is worth noting that investors have already been rotating out of gold into bitcoin ETPs in a sign of a return in global risk appetite (chart-of-the-week). In fact, bitcoin has been outperforming gold by around +16%-points since the beginning of March – when the US-Iran conflict started to escalate. During that time frame, cumulative ETP flows between bitcoin and gold flipped from almost -$6 bn to +$3 bn, i.e. a reversal in cumulative flows of almost +$9 bn in favour of global bitcoin ETPs.

Historically speaking, bitcoin tends to perform well in reflationary environments as highlighted in one of our previous Bitcoin Macro Investor reports. These reflationary environments are also associated with an US business cycle upturn that appears to be underway judging by the latest ISM Manufacturing and Services data releases for March – both the manufacturing and services survey continued to indicate an expansion in March. The ISM Manufacturing Index even surprised positively to the upside.

Despite elevated US recession fears due to a spike in oil prices, inflation expectations, and sovereign bond yields, there is a case to be made that the US economy has become more resilient to oil price shocks compared to previous episodes. One of the key reasons is that US manufacturing has become increasingly geared towards the domestic (shale) oil industry. In fact, the US turned from a net importer of crude oil and petroleum products into a net exporter and biggest global producer. Consistently, the upside surprise in the ISM Manufacturing Index has also recently led to a decline in US recession odds on Kalshi – which may have lifted risk appetite as well.

That said, spot Brent prices have already hit a new all-time high last week in what still appears to be an intensifying supply shortage of physical crude oil. The significant decline in global oil in transit generally suggests a significant drawdown in crude oil stockpiles in both the US and Western Europe which historically tends increase crude oil prices.

In other words, the energy supply crunch is far from over and the latest recovery in risk appetite is still fragile and dependent on the developments in the Middle East. The latest post by Trump also suggests that the military conflict between the US and Iran may not only continue but even re-intensify over the coming weeks.

Cross Asset Performance (Week-to-Date)

Top 10 Cryptoasset Performance (Week-to-Date)

In general, among the top 10 crypto assets Ethereum, Bitcoin and LEO were the relative outperformers. Ethereum also outperformed bitcoin.

Sentiment

Our in-house “Cryptoasset Sentiment Index” was mostly negative week-over-week but steadily improved since Thursday until flipping positive on Sunday. This trend was in line with our improving Cross Asset Risk Appetite and Crypto Dispersion Indices as the major crypto assets, Bitcoin and Ethereum, outperformed.

At the moment, 8 out of 15 indicators are above their short-term trend. This is an improvement from the prior week's 5 indicators suggesting increased breadth of momentum across the market.

Last week, the BTC Long Liquidation Dominance, BTC Exchange Inflows, BTC STH SOPR, BTC STH NUPL, BTC Funding Rate, BTC 1m IV, Crypto Dispersion and Altseason Index showed positive momentum.

The Crypto Fear & Greed Index continues to signal an “extreme fear” level of sentiment as of this morning, broadly staying depressed week-over-week.

Performance dispersion among cryptoassets increased slightly last week to 0.31. This is not incongruent with “extreme fear" as idiosyncratic narratives resurged like the oncoming AI-crypto convergence causing AI tokens to outperform other crypto sectors.

When dispersion is increases, it may indicate that the market appears to be driven by a more diverse set of narratives which, in our analysis, has historically been associated with periods of increasing risk appetite in prior market cycles.

Altcoin outperformance vis-à-vis Bitcoin declined 5%-points last week, with 45% of our tracked altcoins in the index, including Ethereum, outperforming.

Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) increased significantly to 0.08 over the past week, signalling a more optimistic outlook in traditional financial markets. This coincides with Bitcoin and Ethereum's outperformance as investors increase their bias toward riskier assets.

CME Bitcoin Commercials Net Positioning, which shows the difference between long and short CME Bitcoin futures contracts declined from –7.96 to –8.49. This level is the lowest since 2023 and suggests the short view may be a crowded trade, with any reversal potentially contributing to increased volatility.

Fund Flows

Global crypto ETPs saw large net outflows last week across Bitcoin, Ethereum, and basket and thematic products. Only altcoins ex Ethereum products saw total net inflows.

Global crypto ETPs saw around –128.6 mn USD in weekly net outflows across most types of cryptoassets, after -605.3 mn USD in net outflows the previous week.

Global Bitcoin ETPs have experienced net outflows totalling –84.6 mn USD last week, of which +22.3 mn USD in inflows were related to US spot Bitcoin ETFs.

The Bitwise Bitcoin ETF (BITB) in the US experienced net outflows, totalling -3.7 mn USD last week.

In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net outflows equivalent to –0.6 mn USD, whereas the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of +0.1 mn USD.

The Grayscale Bitcoin Trust (GBTC) posted net outflows of –13.3 mn USD and the iShares Bitcoin Trust (IBIT) experienced net inflows of around +16.4 mn USD last week.

Meanwhile, global Ethereum ETPs also experienced –176.5 mn USD in net outflows last week, of which US spot Ethereum ETFs recorded net outflows of around –52.9 mn USD on aggregate.

The Grayscale Ethereum Trust (ETHE) posted net inflows of +0.6 mn USD, whereas the iShares Ethereum Trust (ETHA) that experienced -64 mn USD of net outflows.

The Bitwise Ethereum ETF (ETHW) in the US has posted net inflows of +5.5 mn USD.

In Europe, the Bitwise Physical Ethereum ETP (ZETH) experienced net inflows last week of +0.3 mn USD, as the Bitwise Ethereum Staking ETP (ET32) saw +0.5 mn USD of net inflows.

Altcoin ETPs ex Ethereum experienced net inflows of +133.5 mn USD last week.

Thematic & basket crypto ETPs posted net outflows of -1 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) experienced a net inflow of +0.2 mn.

On-Chain Data

Following a largely sideways week of trading, Bitcoin ended the week higher, reaching a price of $69.5k. Overall, price traded within a relatively tight $65k–$70k range, highlighting the recent indecisive movement. The US/Iran conflict continues to keep markets unpredictable and sensitive to geopolitical shocks. However, recent developments appear to be increasingly absorbed by markets, suggesting that more significant news may be required to drive larger price moves.

Exchange Spot Volume Delta has turned modestly positive, reaching approximately +$200mn. Notably, the metric continues to oscillate around equilibrium, briefly moving into both positive and negative territory. This reinforces prevailing uncertainty among market participants, with no clear directional trend emerging. In parallel, aggregate exchange inflows and outflows declined to a new local low of $2.9bn, marking the lowest activity regime since October 2024. Taken together, these signals suggest investor participation remains subdued, with sentiment still broadly impaired.

Aggregate investor stress remains elevated, with the value of invested capital held at a loss estimated near $796bn (~73% of Realised Cap). This indicates that a substantial share of deployed capital remains underwater, reflecting weakened investor sentiment.

Profit- and loss-taking dynamics remain broadly balanced, with Net Realised Profit/Loss narrowing to around –$175mn, the least negative reading since late January. This aligns with the broader pattern of price and exchange activity reverting toward equilibrium, indicative of a range-bound and trendless market structure. With both sides of the market now relatively subdued, liquidity appears increasingly constrained, a configuration that has in some prior instances been associated with periods of increased volatility , though past patterns are not necessarily predictive of future market behaviour.

HODLing remains a dominant market dynamic among investors, as evidenced by the continued increase in Long-Term Holder (LTH) supply, a cohort representing more mature market participants. LTH balances are currently growing at a rate of approximately +87k BTC per month, suggesting that accumulation by longer-term investors continues to outweigh sell-side pressure. Sustained over time, this dynamic can contribute to tightening available supply, as coins transition toward more value-driven, long-term holders. It should be noted that LTH accumulation has also been observed during extended bear market periods and should not be interpreted as a reliable indicator of near-term price appreciation.

Bitcoin continues to dominate market structure. Correlation and beta percentiles (180-day) across the altcoin complex remain extremely elevated at 97% and 99%, respectively, indicating a predominantly single-factor environment centred on Bitcoin. In parallel, Bitcoin dominance remains near 58%, broadly unchanged since the November 2025 drawdown. Despite Bitcoin being the internal market leader, the digital asset market remains highly sensitive to broader macro forces.

Key price levels remain unchanged. The cycle low near $60k has historically acted as a reference level for downside price action, though no price level constitutes guaranteed support in a volatile market, while the $80k region marks the upper boundary from which the latest contraction accelerated. Price has remained confined within this range since 31 January, reinforcing its significance as the dominant trading regime. The $70k level remains the midpoint of control within the current range-bound structure, with price largely oscillating around this level.

The Realised Price, which reflects the average acquisition price of the market, alongside the 200-week moving average, has historically provided an approximation of terminal cycle lows in a deep bear market. Notably, these two levels currently reside at $54.1k and $59.4k, respectively.

Futures, Options & Perpetuals

Over the past week, BTC perpetual futures open interest declined by approximately -14.9k BTC, reversing part of the substantial +50.5k BTC build seen the week before, while CME futures open interest rose by a more modest +0.9k BTC. This suggests some of the leverage added in crypto-native venues last week has begun to unwind, while institutional positioning has remained broadly steady. Aggregate futures liquidations across all assets also eased somewhat from the prior week's elevated levels. In total, liquidations reached roughly $1.87bn over the week, versus $2.0bn previously, with long liquidations of $840mm and short liquidations of $1.03bn.

After tapping the large liquidity pocket around $67k to $68k last week, positioning has now started to rebuild around $71k. A move into that area may trigger a fresh short squeeze, which could contribute to increased price volatility in either direction if reached. On the downside, there remains a meaningful pocket of liquidity near $65k, which may act as a draw if momentum weakens. In effect, the market has shifted higher, with $71k now emerging as the notable liquidity concentration zone.

Perpetual funding rates, measured on a 7-day moving average, remained broadly flat again this week. Even with some of last week's leverage unwinding, this suggests the market still lacks strong directional conviction and remains reasonably balanced between longs and shorts.

At the same time, the BTC 3-month annualised basis remains subdued at around 2.4%. This suggests, on this metric alone, that the futures curve is still not pricing in a strong near-term bullish impulse, consistent with a market that remains cautious rather than euphoric.

In options markets, BTC options open interest declined modestly by roughly -15.7k BTC, bringing total open interest down to 373.5k BTC. The Deribit put-to-call open interest ratio increased to 0.69, while the equivalent metric across IBIT options also edged higher to 0.71 by week's end.

Taken together, these moves suggest demand for downside protection has picked up somewhat at the margin, even as the overall decline in options open interest points to only a modest adjustment in positioning. The rise in put-to-call ratios across both venues suggests options sentiment has turned a little more defensive than it was a week earlier.

The 25-delta skew moved slightly lower across the term structure during the week. That suggests the premium for downside protection eased somewhat, even as put-to-call ratios moved higher. Taken together, this points to a more mixed options backdrop, where positioning has become somewhat more cautious but without a sharp rise in the price of downside hedges.

Total GEX, on a 7-day moving average basis, dropped sharply from $5.4bn to $2.2bn. This suggests dealer positioning has become materially lighter, reducing the scale of hedging flows that might otherwise amplify spot moves. In practical terms, the market may now be somewhat less mechanically reactive to price action than it was a week ago.

Dealer gamma exposure also remains predominantly negative, with the bulk of negative gamma now clustered around the $70k to $71k strikes and again near $75k. These levels line up with the new upside liquidity zones in futures positioning, reinforcing their importance as areas where price may become more unstable. By contrast, positive gamma is still centred around the $61k to $62k area. If BTC were to move down toward that range, it may help reduce some of the price instability, although that support remains materially below current spot levels.

Bottom Line

Appendix

Bitcoin Price vs Cryptoasset Sentiment Index

Cryptoasset Sentiment Index: Subcomponents

TradFi Sentiment Indicators

Crypto Sentiment Indicators

Crypto Options' Sentiment Indicators

Crypto Futures & Perpetuals' Sentiment Indicators

Crypto On-Chain Indicators

Bitcoin vs Crypto Fear & Greed Index

Cryptoasset Sentiment Index: Daily vs Hourly

Bitcoin vs Global Crypto ETP Fund Flows

Global Crypto ETP Fund Flows

US Spot Bitcoin ETF Fund Flows

US Spot Bitcoin ETFs: Flows since launch

US Spot Bitcoin ETFs: 5-days flow

US Bitcoin ETFs: Net Fund Flows since 11th Jan mn USD

US Spot Ethereum ETF Fund Flows

US Spot Ethereum ETFs: Flows since launch (mn USD)

US Spot Ethereum ETFs: 5-days flow

US Ethereum ETFs: Net Fund Flows since 23rd July (mn USD)

Bitcoin Price vs CME Bitcoin Commercials Positioning

Altseason Index (% of alts outperforming BTC)

Bitcoin vs Crypto Dispersion Index

Bitcoin Price vs Futures Basis Rate

Ethereum Price vs Futures Basis Rate

BTC Net Exchange Volume by Size

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