When gold is no longer a safe haven, and Bitcoin continues to panic
Author: Zhou, ChainCatcher
In chaotic times, buying gold is one of the deeply ingrained logics in every investor's understanding over the past few decades. However, this logic has completely failed in the past few weeks.
Spot gold has fallen for nine consecutive trading days, recording the largest weekly decline since 1981 last week, and has now erased all gains made this year.
Meanwhile, global stock markets have declined, the cryptocurrency market is still in panic, and industrial metals such as copper, aluminum, and zinc have not been spared.
Almost all assets are being indiscriminately sold off, with only crude oil rising.
When the valuation logic of various assets collapses simultaneously, the boundary between safe-haven assets and risk assets also disappears.
1. From Inflation to Recession: What the Market is Pricing In
It has been nearly four weeks since the outbreak of the US-Iran war, and the market's pricing logic for this conflict is undergoing a fundamental shift.
In the early stages of the conflict, the mainstream expectation was: oil prices would rise, inflation would be pressured, but the war would end quickly, and the economic fundamentals would not be fundamentally shaken. Following this logic, some assets remained resilient in the early stages of the conflict.
However, the blockade of the Strait of Hormuz has continued to this day, and this expectation has begun to waver.
Under normal circumstances, this strait sees about 20 million barrels of crude oil pass through daily, but actual flow has plummeted by over 97% since the blockade. International oil prices have surged nearly 50% in just over a month, with Brent crude returning above $110 per barrel.
Investment bank Macquarie stated that if the Strait of Hormuz remains closed until the end of April, Brent crude prices could still reach $150 per barrel.
"Even in the event of a potential easing of tensions (referring specifically to Trump's statement on Monday), it is still expected that oil prices will maintain a bottom at $85 to $90 per barrel and will quickly rebound to the $110 range until the Strait of Hormuz fully reopens."
Persistently high oil prices are transforming a geopolitical conflict into a systemic economic threat.
At the March interest rate meeting, the Federal Reserve announced that the policy rate would remain unchanged, and the dot plot indicated only one rate cut by 2026, with seven officials believing there is no room for rate cuts this year. Powell clearly stated that the room for rate cuts is very limited, and the committee even discussed the possibility of raising rates.
According to the CME FedWatch Tool, the market predicts that the probability of the Federal Reserve raising rates before the end of 2026 has exceeded 30%, while the probability of rate cuts is only 6.1%. A few months ago, the market generally believed there would be at least two rate cuts this year. The European Central Bank and the Bank of England have also successively signaled the possibility of raising rates as early as April.
Goldman Sachs warned in a recent report that the current global assets have only fully priced in the "inflation shock," completely ignoring the devastating impact of high energy costs on global economic growth.
Once the market's blind optimism about a "short-term end to the war" is falsified, "growth downturn (recession)" will become the second shoe to drop, and global asset pricing will face an extremely violent reversal.
This is precisely the core narrative shift in the market over the past week: from "trading inflation" to "trading recession."
When growth itself is threatened, all asset classes will be repriced, which is the fundamental reason behind the bloodbath in copper, aluminum, and zinc, and the new lows in emerging market indices this year.
On the evening of March 21, Trump issued a 48-hour ultimatum, demanding that Iran open the Strait of Hormuz within the deadline, or it would strike and destroy all its power stations.
However, before the deadline was up, Trump posted on social media that the US and Iran had engaged in "very good and productive" dialogue over the past two days.
Iran, on the other hand, firmly denied this, stating that there had been no direct or indirect contact with the US, and that Iran's position on the Strait of Hormuz had not changed.
Iranian state media characterized Trump's statement as "psychological warfare," claiming its purpose was to manipulate financial and oil markets.
Meanwhile, the Iranian Revolutionary Guard continued to launch a new round of missile and drone strikes against Israeli and US military bases in the Middle East on the early morning of March 24. The Pentagon is also evaluating plans to deploy ground troops to the Iranian oil export hub of Khark Island.
In the capital markets, influenced by Trump's statement, US stocks rebounded last night, oil prices briefly plummeted over 10%, and gold experienced a sharp fluctuation, first dropping and then rebounding.
However, Iran's denial returned market sentiment to chaos, and the capital market saw a brief technical rebound, but the core contradictions remained unresolved.
2. Gold: When Safe-Haven Attributes Encounter Rate Backstab
Gold's performance in this round of sell-off is the most perplexing aspect for the market.
According to traditional logic, geopolitical shocks should drive funds into gold. But this time, gold not only failed to maintain its gains after the outbreak of war, but last week recorded the largest weekly decline since 1981, erasing all gains made this year.
The safe-haven attribute of gold has a premise that is often overlooked: monetary easing, or at least a downward trend in interest rates.
This time, the transmission chain is exactly the opposite. War drives up oil prices, oil prices drive up inflation, inflation forces global central banks to turn hawkish, and real interest rate expectations rise, causing the opportunity cost of holding non-yielding gold to soar. Funds no longer need gold; they can comfortably rest in US Treasuries yielding 4.39%. The safe-haven logic of gold has been short-circuited by the logic of interest rates.
At the same time, highly leveraged long positions accumulated at high levels concentrated their positions after the expectation reversal, further accelerating the decline.
Another factor is that the market has begun to speculate that sovereign wealth funds from Gulf countries may also be participating in the sell-off, although this has not been confirmed, it is not a baseless assumption. The 20% weekly plunge in gold in 1983 was due to large-scale liquidation of gold reserves by oil-producing countries in the Middle East. At that time, falling oil prices led to a sharp reduction in income, forcing them to sell gold for cash.
Although the current situation is different, with high oil prices but the blockade of Hormuz preventing crude oil from being exported, Gulf countries are also facing a sudden drop in income, while also bearing the costs of defense spending and infrastructure reconstruction due to the war. However, the motivation to liquidate assets is similar.
China International Capital Corporation's research report shows that in fact, there are many factors affecting gold prices, gold is highly volatile and is not necessarily a safe asset.
However, this does not mean that gold's long-term logic has been destroyed.
Shaokai Fan, global central bank head of the World Gold Council, stated that gold, as a tool to hedge against de-dollarization and geopolitical risks, is expected to prompt central banks that have previously been absent from the market to buy this precious metal this year.
At the same time, most institutions still maintain a high target price for gold this year. Analyzing from the perspectives of the US dollar, US Treasuries, and changes in funds, some analysts expect that there will still be rebound demand for London gold in the second quarter.
However, in the current interest rate environment, gold is primarily a highly interest-sensitive asset, and only secondarily a safe-haven tool.
In a liquidity-constrained environment, this order of priority is crucial.
3. Bitcoin: The Narrative of Digital Gold is Being Rewritten by Institutionalization
Bitcoin has also not become a safe haven; it has fallen alongside gold.
For cryptocurrency investors, this round of decline carries a more significant signal that deserves attention.
Bitcoin once had its own independent logic. Early supporters positioned it as "digital gold"—limited in supply, decentralized, and unaffected by central bank monetary policy, capable of moving independently of other assets during turmoil in the traditional financial system.
This narrative was indeed partially valid in the early days of the cryptocurrency market, with Bitcoin's correlation with US stocks remaining low for a long time. However, over the past two years, the foundation of this logic has been quietly shifting.
The approval of spot Bitcoin ETFs and the inclusion of BTC in the balance sheets of corporate treasuries and sovereign funds have brought institutional funds into the cryptocurrency market on an unprecedented scale. This initially drove prices up and allowed the entire industry to feel the benefits of institutionalization.
The problem is that as institutional funds entered, they also brought along the behavioral logic of traditional financial markets.
Institutions manage risk budgets, and when the macro environment deteriorates and risk appetite shrinks, their operating manual has only one rule: reduce exposure to high-volatility assets. Bitcoin happens to be among the most volatile.
In this round of decline, Bitcoin ETFs have seen continuous net outflows, with a significant increase in correlation with the Nasdaq.
Even the most steadfast Bitcoin bulls saw a 95% drop in buying amounts last week, although they increased their holdings by $76.6 million to 1,031 BTC, bringing total holdings to 762,099 BTC, the reduction in buying pace compared to before is substantial, and other DAT companies have nearly halted their buying pace.
During the most liquidity-constrained moments, even strategic holders are showing clear restraint.
Since the historical high in October last year, Bitcoin's maximum drawdown was nearly halved, and it is currently fluctuating around $70,000. It is becoming a high beta version of the Nasdaq—rising more sharply when liquidity is abundant and falling deeper when liquidity contracts.
The narrative of "digital gold" may not have completely disappeared, but under a market structure dominated by institutional pricing, Bitcoin is primarily a risk asset; it must first pass the liquidity test.
Conclusion
Overall, the uniqueness of this round of asset sell-off lies in the fact that the forces triggering it are acting on the pricing system at the most fundamental level, binding almost all assets together in a chain.
The actual degree of navigation restoration in the Strait of Hormuz is upstream of all issues. Only when the oil supply gap is filled can oil prices have room to fall, inflation pressures can ease, and the central bank's hawkish stance may marginally soften. Whether Trump and Iran's negotiations make substantive progress is the most critical observation window in the near term.
The Federal Reserve's statements are the second key signal. If the situation tends to ease and the Strait of Hormuz reopens, the Federal Reserve may cut rates again within the year. If the conflict prolongs, the Federal Reserve will likely prioritize stabilizing inflation, and any marginal changes in policy narrative will directly impact the valuation logic of all risk assets.
For cryptocurrency investors, the weekly fund flows of Bitcoin spot ETFs are key indicators worth tracking; positive fund flows often lead price stabilization. The movement of the US dollar index is a direct window to observe whether the global liquidity environment is improving.
Market fears are never without reason. In the current situation, understanding what it fears is more meaningful than guessing when it will stop fearing.
You may also like

Arthur Hayes New Post: It's "No Trade" Time Now

Claude Opus 4.7 Review: Is It Worthy of the Title of Strongest Model?

DWF In-Depth Report: AI Outperforms Humans in Yield Farming Optimization in DeFi, But Complex Transactions Still Lag Behind 5x

The financial tricks of the crypto giant Kraken

When proactive market makers start to take initiative

Massive Whale Movement: Unstaking $84.96 Million in HYPE Tokens
Key Takeaways A crypto whale, known as TechnoRevenant, has unstaked approximately $84.96 million in HYPE tokens. The tokens…

ListaDAO Addresses Third-Party Contract Vulnerability Concerns
Key Takeaways GoPlus Security revealed a vulnerability in a contract resembling those of ListaDAO. ListaDAO confirmed that their…

Security Risks of Fake Ledger Nano S+ Devices Emerging Through Chinese E-Commerce
Key Takeaways Counterfeit Ledger Nano S+ devices are being sold on Chinese e-commerce platforms, posing significant risks to…

Wave of Cyber Attacks Hits DeFi Protocols Post-Drift Hack
Key Takeaways A significant $280 million attack on Drift Protocol set off a chain of security breaches across…

Tom Lee Says ‘Mini Crypto Winter’ Is Over, Sees Ether Above $60K
Key Takeaways: Tom Lee predicts Ether’s resurgence, projecting it to surpass $60,000 in the coming years. Bitmine suffered…

French Government Tackles Rising Crypto Safety Concerns
Key Takeaways: France is intensifying measures to counter the surge in crypto kidnappings and wrench attacks. Since early…

Europe’s Bitcoin Treasury Playbook Unlikely to Mirror US Strategy: PBW 2026
Key Takeaways: European firms are adapting unique Bitcoin treasury strategies due to distinct financial regulations and market dynamics…

Circle Confronts Lawsuit Over $280M Drift Protocol Hack
Key Takeaways: Circle faces a lawsuit for allegedly aiding in the transfer of $230 million in stolen USDC.…

Bitcoin Faces ‘Near-Term Selling Pressure’ Following Surge to $76K: CryptoQuant
Key Takeaways: Bitcoin reaches a multi-month high of $76,000, prompting increased deposits to exchanges. CryptoQuant identifies a peak…

Ethereum Foundation Unveils North Korean Infiltration in Web3
Key Takeaways: The Ethereum Foundation’s ETH Rangers program exposed 100 North Korean operatives infiltrating Web3 companies. The Ketman…

Crypto in Sustained Winter as CEX Volumes Drop 39% in Q1
Key Takeaways: Centralized crypto exchange trading volume fell by 39% in Q1 2026 to $2.7 trillion. March saw…

Bitcoiners Should Prepare for Quantum Computing Now, Urges Adam Back
Key Takeaways: Adam Back emphasizes immediate steps toward quantum-resistant solutions for Bitcoin. Quantum computing may disrupt blockchain security…

Cybersecurity Alert: Counterfeit Ledger Devices on Chinese Market
Key Takeaways: Scammers distribute fake Ledger devices via Chinese marketplaces, risking user crypto assets. Victims of a related…
Arthur Hayes New Post: It's "No Trade" Time Now
Claude Opus 4.7 Review: Is It Worthy of the Title of Strongest Model?
DWF In-Depth Report: AI Outperforms Humans in Yield Farming Optimization in DeFi, But Complex Transactions Still Lag Behind 5x
The financial tricks of the crypto giant Kraken
When proactive market makers start to take initiative
Massive Whale Movement: Unstaking $84.96 Million in HYPE Tokens
Key Takeaways A crypto whale, known as TechnoRevenant, has unstaked approximately $84.96 million in HYPE tokens. The tokens…



