Geopolitical Tensions Weigh on Bitcoin – Gold Tokens Benefit

Geopolitical Tensions as a Litmus Test for Bitcoin as a Store of Value

The military escalation between the USA, Israel, and Iran reveals a familiar pattern: In immediate response to geopolitical uncertainty, Bitcoin initially shows volatility and falls – while traditional safe-haven assets like gold gain in value. However, the current situation is more than a short-term market movement. It raises fundamental questions about Bitcoin's role as a store of value in times of crisis and demonstrates the dual nature of the asset between digital gold and risk-bearing investment.

The reaction in the crypto market was clear: While Bitcoin and altcoins came under pressure, the gold-backed token PAX Gold (PAXG) recorded significant gains – a sign that investors are actively reallocating within the crypto market into defensive positions.

The Facts

The USA and Israel launched coordinated attacks on Iran over the weekend, targeting military infrastructure, Iran's nuclear program, and leadership personnel ^[1]. US President Donald Trump confirmed active US participation in a video statement, declaring that the goal was to "eliminate immediate threats from the Iranian regime" ^[1]. Multiple explosions were reported from the capital Tehran and other cities, with the residence of Iranian Supreme Leader Ayatollah Ali Khamenei apparently also attacked ^[1].

Iran responded with rocket attacks on Israel and US military bases in the Gulf region, with at least one civilian already killed ^[1]. The probability of a US attack on Iran had already risen on the betting platform Polymarket from 6.5 to over 20 percent on Friday, after Trump told reporters that he didn't really want to attack Iran, but sometimes you have to do it ^[1].

Bitcoin's price slipped to a daily low of just over $63,000 in response to the escalation ^[1]. However, the intermediate low from Tuesday of the same week was not breached ^[1]. With a possible weekly close in the red, this would be the sixth consecutive red weekly candle – a pattern last observed in the 2022 crypto winter, when there were ultimately nine ^[1]. Bitcoin has been in a broader downtrend for several months, with February almost certainly becoming the fifth consecutive month of losses ^[1].

While Bitcoin and the overall market lost four percent in market capitalization, PAX Gold (PAXG) developed in the opposite direction ^[2]. The token backed by physical gold rose to $5,458.04, representing a gain of approximately $151.81 compared to the previous day's close ^[2]. Particularly striking: Trading volume exploded by 302 percent to $1.04 billion – a clear sign of active reallocation ^[2]. The token broke through the intraday high of $5,600 and approached the all-time high of $5,619.09 ^[2].

Technical indicators confirmed the bullish tendency for PAXG: The RSI stood at 68.12, signaling strong buying momentum without extreme overbought levels, while the MACD histogram showed positive acceleration ^[2]. The price was trading well above the EMA-20 at $5,255.62 ^[2].

Analysis & Context

The market reaction to the military escalation follows a familiar pattern that has been observed multiple times: Bitcoin reacts sensitively to geopolitical shocks in the short term, but often recovers more strongly than traditional asset classes in the medium term. BlackRock had pointed to this pattern in a report ^[1]. A concrete example: When the USA attacked Iran's nuclear program with an air strike in June 2025, Bitcoin also initially came under pressure, but rose to a new all-time high within a few weeks ^[1].

However, the current situation differs in one essential aspect: Bitcoin is already in a multi-month downtrend and technically weakened state. The geopolitical uncertainty is hitting an already weakened market, which could delay recovery dynamics. The question is less whether Bitcoin will recover, but rather how long the escalation will last and how sustainable the economic consequences will be.

Particularly relevant is the potential threat to the Strait of Hormuz, through which approximately 20 percent of global crude oil shipments pass ^[1]. A closure by Iran would result in higher oil prices and possibly rising inflation rates ^[1]. In such a scenario, Bitcoin could benefit in the medium term from its non-state nature and limited supply – but in the short term, broader capital markets would come under pressure and Bitcoin as a liquid asset might be pulled down with them.

The reallocation into gold-backed tokens like PAXG reveals an interesting development: Investors are seeking defensive positions but apparently don't want to give up the technological advantages and 24/7 tradability of the crypto market. Trading volume of over one billion dollars for PAXG shows that there is significant demand for gold exposure in tokenized form. In the long term, this could be an indication that traditional safe-haven characteristics are increasingly migrating into blockchain-based structures.

For Bitcoin itself, the central challenge remains establishing itself as a credible store of value in acute crisis moments. The 24/7 tradability is both a curse and a blessing: It enables immediate reactions to shock situations in a highly liquid market ^[1], but also leads to immediate volatility while traditional markets are closed and panic selling can only occur with delay.

Conclusion

• Bitcoin once again shows the familiar pattern: short-term weakness during geopolitical shocks, but historically strong medium-term recovery power – however, the current situation tests whether this pattern holds up even in an already weakened market environment

• The reallocation into gold-backed tokens like PAXG with a volume increase of 302 percent shows that investors prefer defensive assets in tokenized form and are using crypto market infrastructure for traditional safe-haven strategies as well

• Further developments depend significantly on the duration and intensity of the escalation – particularly the Strait of Hormuz and possible impacts on oil prices and inflation could strengthen the perception of Bitcoin as inflation protection in the medium term

• With potentially six consecutive red weeks and five months of losses, Bitcoin is in a critical technical phase – historical comparisons with 2018 and 2022 urge caution, even though the fundamental framework conditions are different

• Bitcoin's 24/7 tradability remains a double-edged sword: It enables immediate reactions but also leads to increased volatility in shock moments while traditional markets are closed