Cryptocurrency's Resilience Amid Geopolitical Risk

As global stock markets undergo significant adjustments, cryptocurrencies are showing different movements. Even amid market turmoil following last week’s Middle East conflict outbreak, some cryptocurrencies remained relatively resilient. This trend in currency markets highlights the differences from traditional financial assets.

Global stock markets crash, cryptocurrencies move differently

As regional conflicts intensify, risk-averse sentiment has led to widespread sell-offs in stock markets. In the U.S., the Nasdaq dropped 2.5%, and the S&P 500 declined 2.3%. In Europe, declines were even steeper, with Italy’s IBEX 35 falling 5.2% and Germany’s DAX down 4.1%.

Meanwhile, the cryptocurrency market has shown limited but steady support. Bitcoin is currently trading around $70,900, up over 5% in 24 hours. Ethereum has risen over 6%, Solana over 7%, and XRP over 4%, with major currencies generally rebounding.

Precious metals, which hit record highs in the weeks before the war, also plummeted along with stocks. Gold fell 4.3%, silver 7.5%, and platinum 11.3%. WTI crude oil continued to rise due to supply concerns, reaching $77 per barrel, an 8% increase.

Crypto-related company stocks face selling pressure

While the crypto market remains relatively resilient, stocks of related companies are still under strong selling pressure. Robinhood declined 7%, Coinbase fell 5%. Asset management firm MicroStrategy and digital asset platform BULLISH each dropped 4%. Stablecoin issuer Circle also experienced about a 1% decline.

This stock decline reflects the impact of geopolitical risks on corporate profits and worsening investor sentiment. While the crypto market shows limited recovery, related companies as businesses are under greater pressure.

Cryptocurrency market cycle and current position

James Butterfill, Head of Research at CoinShares, offers key insights into the crypto market movements. “Bitcoin has historically been the only liquid asset traded over weekends, absorbing shocks during turbulent times. The current price trend is constructive. Despite rising yields and escalating geopolitical tensions, the absence of significant liquidations suggests positioning has been adjusted compared to before.”

Looking at the adjusted M2 money base, gold is approaching historic peak levels. Meanwhile, cryptocurrencies are in a typical correction phase before reaching new cycle highs. In this environment, cryptocurrencies are clearly serving as a hedge in portfolios.

Even amid ongoing geopolitical risks, the crypto market continues to demonstrate differences from traditional financial assets in terms of liquidity and store of value. How to evaluate this resilience amid the overall market downturn will be a key point for investment strategies.