Gold plummets, "safe haven for funds" changes hands? JPMorgan: During war, "Bitcoin becomes the new favorite for hedging."

Fighting in the Middle East continues to rage, and the global safe-haven playbook is already being reshuffled. JPMorgan Chase said that during the period when a geopolitical conflict erupted in Iran, Bitcoin—known as “digital gold”—saw large-scale capital inflows and rising trading activity, demonstrating a drawdown-resilient staying power far stronger than gold and silver. By contrast, precious metals faced a mass exodus of capital and the grim liquidation of long positions. Why did the traditional “safe-haven” instrument fail in this crisis? A JPMorgan Chase research team led by Nikolaos Panigirtzoglou said in a report released Wednesday that gold prices have fallen by about 15% since the beginning of this month, mainly due to the steadily rising interest-rate environment and a strong U.S. dollar, which have put pressure on “previously overly crowded positions.” Analysts said that earlier this year, both gold and silver surged to record highs. Gold is approaching $5,500 per ounce, and silver has climbed to $120. Once the market’s direction shifts, both are prone to being affected by profit-taking and position liquidations. Data shows that in the first three weeks of March this year, gold ETF assets saw outflows of nearly $11 billion. Meanwhile, silver ETF inflows accumulated since last summer have already been fully unwound and completely reversed. By contrast, Bitcoin over the same period saw net capital inflows—forming a stark difference versus traditional safe-haven assets. Citing Chainalysis data, analysts said that as the conflict escalated, cryptocurrency activity in Iran surged dramatically. People have moved funds from local exchanges to self-custody wallets and international platforms. Analysts believe Bitcoin’s borderless nature, self-custody capability, and the advantage of 24/7 nonstop trading make it an obvious tool of choice for residents in war-torn regions facing economic breakdown, currency depreciation, and threats of capital controls—used to move and safeguard their assets. Changes in institutional positioning are also worth paying attention to. Citing CME open interest data, JPMorgan Chase said that gold and silver positions continued to build up from late last year into early this year, but have sharply declined since January, indicating that institutional investors are taking profits. By comparison, Bitcoin’s futures positions have remained relatively stable over the past few weeks. Momentum traders also seem to be intensifying this round of asset rotation. Analysts said that indicators related to momentum strategies (such as commodity trading advisers) show that gold and silver have fallen from “overbought levels” to “below neutral,” suggesting that forced liquidations are the culprit behind the recent plunge in metal prices. At the same time, Bitcoin’s momentum signals have gradually recovered from “oversold levels” back to neutral, reflecting that market sentiment is improving. Liquidity conditions across different assets have also changed. Analysts said that according to the market breadth and liquidity indicator “Hui-Heubel Ratio,” gold has historically been more liquid than silver and Bitcoin. However, this trend has recently reversed: gold’s liquidity conditions have continued to hold up, Bitcoin has actually shown better market breadth, and silver’s liquidity has shrunk rapidly.