Gold, widely seen as a representative safe-haven asset, is moving in an unusual way. Since the outbreak of the U.S.-Iran war on Feb. 28, gold has fallen about 15 percent to $4,500 an ounce as of March 27. That runs counter to past patterns, such as a roughly 13 percent rise during the 1990 Gulf War and a roughly 10 percent rise in the early stage of the 2022 Russia-Ukraine war, when gold gained strength during geopolitical crises.

According to an analysis by U.S. investment research firm Morningstar on March 23 local time, the recent decline in gold can be explained by the so-called “oil shock paradox.”

Iran’s closure of the Strait of Hormuz sent international oil prices sharply higher, widening inflation worries and feeding expectations that the U.S. Federal Reserve will reinforce its tightening stance. The logic is that expectations of Fed rate hikes lift real yields and drive a stronger dollar, reducing the relative appeal of gold, which offers no interest income.

Overheating concerns built up after gold jumped about 65 percent last year also added to downward pressure. Another analysis says some hedge funds sold gold first, where they had large unrealised gains, to meet margin calls, increasing short-term supply.

Bitcoin shows relative strength in crisis, highlighting “digital safe-haven asset”

Unlike plunging physical gold, bitcoin, often called “digital gold,” has been relatively resilient.

Risk-off sentiment strengthened in global financial markets immediately after the U.S.-Iran war broke out and prices briefly wobbled, but losses were limited. It recovered to around $73,000 at one point in mid-March. More recently, it has traded between the high $60,000s and the low $70,000s. Its relatively stable trend is drawing attention even as international oil prices again top $100 a barrel.

An assessment says bitcoin’s structural characteristics also support that trend. Its total issuance is capped at 21 million, and its annual supply growth rate is lower than gold’s. If individuals keep private keys themselves, it is difficult for states or institutions to physically seize the asset, which raises its appeal as an alternative asset as geopolitical risk expands. The ability to trade via a 24-hour global network is also working as a strength when financial infrastructure is unstable.

Still, with Iran rejecting a U.S. proposal for talks to end the war and the conflict entering a prolonged phase, major institutions are split on bitcoin’s direction. Campbell Harvey (캠벨 하비), a professor at Duke University’s Fuqua School of Business, said bitcoin would be hard-pressed to replace gold, a traditional safe-haven asset, because it is not backed by physical assets, and forecast that gold prices will rise over the long term.

"Digital gold" vs "high-risk asset" as outlook remains divided

Mike McGlone (마이크 맥글론), a senior strategist at Bloomberg Intelligence, issued an extreme warning that bitcoin could plunge to $10,000, citing a shift from inflation to deflation and tightening liquidity. Crypto analyst Dan also pointed out that while bitcoin rebounded from $60,000, there is insufficient clear evidence that it has shifted from a medium- to long-term downtrend to an uptrend.

Others also raise the view that long-term geopolitical instability could instead create a favourable environment for bitcoin.

Macro strategist Mark Connors (마크 코너스) argued, “The longer the war lasts, the more fiscal deficits in each country will expand, which will lead to a fall in the dollar’s value and work positively for bitcoin.” JP Morgan also said in a recent report that bitcoin showed a more stable trend than gold and silver during a geopolitical crisis. Gautam Chhugani (퀀텀 추가니), an analyst at Bernstein, also predicted bitcoin will wrap up its correction phase and shift to an uptrend.

Ultimately, a prolonged war is likely to weigh on broader financial markets through the dual pressure of inflation and monetary tightening. With gold showing signs of its traditional safe-haven status wavering, views remain split on whether bitcoin can replace it. An analysis says whether the recent rebound remains a temporary recovery or becomes a catalyst strengthening its standing as a digital safe-haven will depend on future shifts in the macro environment.