Crypto has had a pretty good run since the conflict in Iran broke out. The price of bitcoin (still overwhelmingly the biggest cryptoasset by market cap) climbed from $66,000 at the end of February to $78,000 today. That is an increase of over 18 per cent, as the chart below shows.
The price of ethereum, the second-biggest player, has also risen by around 20 per cent over the period, although to a more modest high of $2,300. Chris Beauchamp, chief market analyst at investing platform IG, notes that “bitcoin and ether have, by the standards of other assets, had a ‘good war’”.
The rally follows a bruising year for bitcoin. After hitting a high of $91,000 last summer, the price almost halved before recovering just ahead of conflict breaking out in Iran. Compared with US equities, the volatility has been striking. Even though the S&P 500 has been buffeted by unrest and political uncertainty, share prices have charted a more stable path over the past 12 months, as the chart shows.
This backdrop makes it difficult to predict where crypto prices might go next. This month, analysts at Deutsche Bank revealed the results of a survey of 3,400 consumers who were asked where they thought the price of bitcoin would settle over the next year. The most common response was “have no idea/cannot predict” – selected by almost half of respondents. While 13 per cent of US respondents think the bitcoin price could fall below $20,000 this year, 5 per cent believe it will return to its record high of $120,000.
Is bitcoin a diversifier?
The chart above doesn’t just highlight bitcoin’s price volatility. The shaded area shows that as the S&P 500 moved downwards after conflict broke out, the bitcoin price rose – zigging while stocks zagged. This raises an interesting question for investors: can crypto help to hedge against stock price movements in volatile times?
Since its inception, crypto advocates have argued that its distance from the traditional financial system lets it behave as a kind of ‘digital gold’. But the pandemic really tested this claim: bitcoin fell alongside equities at the start of the Covid-19 era, and rose as quantitative easing helped to buoy markets.
Research in 2023 by academic Martin Nedved found that bitcoin tends to move in line with stock markets, suggesting that it does not act as a classic safe haven for equities. He said that gold, by contrast, can provide a haven for crypto assets – just as it does for stocks. If conflict in the Middle East lingers or intensifies, investors may be more inclined to turn to the yellow metal than bitcoin as a refuge.
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Risk on?
But if conflict eases, could investors move back into bitcoin, as risk appetite returns? It’s certainly plausible: in the Deutsche Bank survey, bitcoin held up reasonably well when investors were asked which asset they would favour for new investments. Over a one- to three-year horizon, about a quarter of US respondents chose bitcoin, compared with almost 30 per cent for the S&P 500 and 27 per cent for gold.
The survey also found that US crypto adoption had recovered to July 2025 levels – a near-record 12 per cent. In the UK, adoption has dipped slightly, but remains higher than last year’s 9 per cent. Even so, there are reasons to think that a peace deal would have a more muted impact on crypto than on stocks.
Companies are anchored in the real economy, where supply chain snarl-ups and energy costs feed directly into profits and results. As the chart shows, the energy-sensitive FTSE 100 index has been hit harder by the unrest, and has not yet recovered to its pre-conflict high. A reopening of the Strait of Hormuz would boost sentiment across the board, but it would have more tangible implications for equities, especially in more energy-dependent industries.
IG’s Beauchamp points out that while stocks have rebounded impressively since a ceasefire was announced, crypto’s recovery has been “anaemic by comparison”. He adds that “it’s far from clear that an actual peace deal would help the sector much”.