By Omkar Godbole (All times ET unless indicated otherwise)
Bitcoin
$70,761.50
rose to just short of $72,000, hitting a one-month high and lifting the broader crypto market even as the war in the Middle East wreaks havoc on traditional marke
The outperformance stems from several factors, including relative positioning, rising odds of the passage of the U.S.'s long‑debated Clarity Act aimed at legalizing stablecoins and hopes that conflict with Iran will end soon.
Bitcoin, down nearly 50% from its record high in October, was oversold before hostilities began Saturday. So as traditional assets tumbled, BTC held up well. That has likely revived investor interest in the largest cryptocurrency, drawing institutions back to the spot ETFs.
As noted on Monday, bitcoin stands to gain because the war will only worsen government finances worldwide, leading to more "fiat debasement."
Meanwhile, the New York Times put out an interesting report that likely aided the price bounce, according to Bloomberg. The report said that the day after the attacks began, operatives from Iran’s Ministry of Intelligence contacted the CIA to discuss terms for ending the war. While the U.S. ignored the overture, the outreach suggests backchannels are still active and could be used again, potentially leading to a ceasefire.
Lastly, there's the possibility the Clarity Act could be passed soon.
There was speculation circulating in the U.S. that the Clarity Act was close to being signed into law. This helped lift many altcoins relative to major assets, as they are expected to be among the biggest long-term beneficiaries of the legislation," Paul Howard, director at trading firm Wincent, said in an email.
However, he added that there is currently no strong evidence that a large pool of sidelined money is waiting to flood into digital assets, and any rotation is still relatively small or gradual.
Looking ahead, traders expect volatility to persist, particularly if the Strait of Hormuz, a key oil-supply chokepoint, remains closed and oil prices continue to surge.
We expect continued volatility, but if the disruption persists, pressure to reopen Hormuz is likely to build. Bitcoin has held up better than broader risk, and bears watching as an early signal of stabilizing sentiment," QCP Capital's market insight team said. Stay alert!