Escalating tensions between the US and Iran are driving investors towards safe-haven assets, with gold emerging as a preferred choice, while equities and Bitcoin experience pressure. As tensions in the Middle East intensify, investors are increasingly turning to gold, causing its demand to surge as they move away from stocks and cryptocurrency markets.
On Wednesday, reports indicated a significant rise in Iran's crude oil exports, showing shipments from Kharg Island reaching 20.1 million barrels from February 15th to Friday. This figure is nearly triple January's level, seen as a strategic supply release and a safeguard against potential disruptions due to escalating US-Iran tensions.
Analysts from Bitunix have noted that the US's increasingly aggressive stance on Iran’s nuclear activities has heightened the chances of conflict. "Should a direct military conflict between the US and Iran arise, gold could potentially increase by about 15% within two weeks, aiming for a price range of $5,500 to $5,800 per ounce," they noted in a report for Cointelegraph.
Meanwhile, the cryptocurrency market is also feeling the impact of these macroeconomic forces. Analysts pointed out that a shift of funds into the US dollar as a safe-haven could pressure Bitcoin (BTC) prices into the $64,000-$65,000 range. However, if inflation concerns overshadow dollar stability, there might be a pivot towards alternative hedges, possibly driving BTC to hit $69,000 liquidity levels.
The Kobeissi Letter recently shared data indicating a noticeable shift in investor behavior towards safe assets. Indian investors are notably reallocating their capital into gold, with gold ETF inflows reaching approximately 250 billion rupees ($2.7 billion), setting a new record and surpassing equity mutual fund inflows for the first time.
The surge in gold ETF demand, which has increased by over 900% since July, contrasts with a $1.9 billion drop in equity fund inflows, highlighting a significant change in capital allocation, especially in India, the world's second-largest gold consumer and one of its top importers.
Currently, gold is trading at about $5,172 per ounce, showing a slight decline for the day, although it has risen by $219 (4.4%) over the past week.
While gold is attracting more defensive investments, on-chain data suggests that confidence in cryptocurrency remains subdued. A recent Glassnode report revealed that Bitcoin continues to trade within the $60,000 to $70,000 range, with minimal whale accumulation and ongoing ETF outflows.
The report also showed that about 9.2 million BTC are currently held at a loss, with the 90-day realized profit-to-loss ratio dropping below 1, indicating more holders are selling at a loss than those securing profits.
Despite this, US-listed spot Bitcoin ETFs experienced a resurgence on Wednesday as Bitcoin prices climbed back above $68,000. These funds attracted around $506.5 million in daily inflows, the largest since early February, signaling a potential weekly inflow for the first time after five weeks and $3.8 billion in outflows.