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

The conflict in the Middle East is escalating, and the global risk-averse landscape is already undergoing a reshuffle. JPMorgan Chase stated that during the outbreak of geopolitical conflict in Iran, Bitcoin, known as “digital gold,” has seen a significant inflow of funds and increased trading activity, demonstrating a much stronger resilience against declines compared to gold and silver; in contrast, precious metals are facing massive capital outflows and severe liquidations 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 fallen about 15% since the beginning of this month, primarily due to the continuously rising interest rate environment and a strong dollar, which have put pressure on the “previously overcrowded positions.”

Analysts noted that both gold and silver soared to historical 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 liquidations.

Data shows that in the first three weeks of March this year, gold ETFs bled nearly $11 billion; meanwhile, the funds accumulated in silver ETFs since last summer have all been fully withdrawn. In contrast, Bitcoin during the same period has experienced net inflows of funds, forming a stark contrast with traditional safe-haven assets.

Analysts cited Chainalysis data stating that as the conflict intensifies, local cryptocurrency activity in Iran has seen explosive growth, with citizens moving funds from local exchanges to self-custody wallets and international platforms. Analysts believe that Bitcoin’s borderless characteristics, self-custody ability, and 24/7 trading advantages have undoubtedly made it the preferred tool for people in war-torn regions facing economic collapse, currency devaluation, and threats of capital controls to transfer and safeguard their assets.

Changes in institutional positioning are also worth noting. JPMorgan cited data from the CME on open interest, indicating that positions in gold and silver continued to accumulate from the end of last year to the beginning of this year, but have sharply declined since January, showing that institutional investors are taking profits. In contrast, Bitcoin’s futures positions have remained relatively stable in recent weeks.

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

The liquidity conditions of different assets have also changed. Analysts stated that according to the “Hui-Heubel Ratio,” which measures market breadth and liquidity, gold has historically had greater market liquidity than silver and Bitcoin. However, this trend has recently reversed: gold’s liquidity conditions have continued, while Bitcoin has shown better market breadth, and silver’s liquidity has sharply contracted.