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

The flames of war in the Middle East rage on, and the global risk-averse landscape is already being reshuffled. JPMorgan Chase stated that during the outbreak of geopolitical conflict in Iran, Bitcoin, known as “digital gold,” has seen a significant influx of funds and increased trading activity, demonstrating a far stronger resilience against declines compared to gold and silver; in contrast, precious metals are facing a situation of large-scale capital flight and severe liquidation of long positions.

Why has the traditional “safe-haven asset” failed in this crisis? The JPMorgan analysis team, led by Nikolaos Panigirtzoglou, released a report on Wednesday indicating that gold prices have dropped by about 15% since the beginning of this month, primarily due to the continuously rising interest rate environment and a strong dollar, which has put pressure on “previously overcrowded positions.”

Analysts noted that gold and silver both soared to historic highs earlier this year, with gold prices nearing $5,500 per ounce and silver prices surging to $120; once market sentiment shifts, both are susceptible to profit-taking and position liquidation.

Data shows that in the first three weeks of March this year, gold ETFs experienced a capital outflow of nearly $11 billion; meanwhile, the capital inflow accumulated in silver ETFs since last summer has all but evaporated. In contrast, Bitcoin during the same period has seen a net inflow of funds, forming a stark contrast with traditional safe-haven assets.

Analysts cited Chainalysis data stating that as the conflict escalated, local cryptocurrency activity in Iran experienced explosive growth, with the public transferring funds from local exchanges to self-custody wallets and international platforms. Analysts believe that Bitcoin’s borderless nature, self-custodial capability, and 24/7 uninterrupted trading advantages have undoubtedly made it the preferred tool for people in war-torn regions to transfer and safeguard their assets amidst threats of economic collapse, currency devaluation, and national capital controls.

Changes in institutional positioning are also noteworthy. JPMorgan referenced data from the Chicago Mercantile Exchange (CME) showing that positions in gold and silver have continued to accumulate from late last year to early this year, but have sharply declined since January, indicating that institutional investors are taking profits. In contrast, Bitcoin futures positions have remained relatively stable in recent weeks.

Momentum traders seem to have exacerbated this asset rotation. Analysts pointed out that indicators related to momentum strategies (such as commodity trading advisors) show that gold and silver have dropped from “overbought levels” to “below neutral,” indicating that forced liquidations are the main culprit behind the recent plunge in metal prices; at the same time, Bitcoin’s momentum signals have gradually risen from “oversold levels” back to neutral, reflecting an improvement in market sentiment.

The liquidity conditions of different assets have also changed. Analysts stated that based on the “Hui-Heubel Ratio,” which measures market breadth and liquidity, gold has historically had more market liquidity than silver and Bitcoin. However, this trend has recently reversed: gold’s liquidity situation has remained steady, while Bitcoin has demonstrated better market breadth, and silver’s liquidity has sharply contracted.