As August began, the S&P 500 index reached a historic peak once again, while gold surged past $4300 per ounce. Meanwhile, Bitcoin lingered around $64,900, nearly half of its peak from October.
This scenario contradicts many theories used to explain Bitcoin's behavior. If it were a risk asset, it would likely have risen alongside U.S. stocks. Conversely, as a safe haven, it should have followed gold, which had rebounded to yearly highs after a drop in January. Instead, Bitcoin has declined for three consecutive quarters, seemingly independent of both markets.
We will explore the ongoing debate about Bitcoin as either a safe haven or risk asset, the implications of the U.S. and Israeli strikes on Iran in February, and the current factors affecting cryptocurrency valuations today.
Defining the Debate
The long-standing debate is partly stalled because participants assign different meanings to key terms. The concept of a "safe haven" has a precise definition that is rarely used outside academic circles.
In a 2010 article for the Financial Review, financial market researchers Dirk Baur and Brian Lucey proposed distinguishing three possible roles for an asset in a portfolio:
- Hedge — prices are weakly correlated with stock indices or move inversely, based on historical observations.
- Diversifier — there is a positive correlation with the market, but the asset merely dampens portfolio fluctuations.
- Safe haven — in stable times, the asset behaves like any other, but during market crashes, it either stops following the market or appreciates against it.
Baur and Lucey evaluated the first two roles over the entire price history, while they assessed the third only during periods of extreme negative returns. They set specific thresholds for market stress, considering sessions when the index fell within the bottom 1%, 2.5%, or 5% of historical performance. Thus, the assessment of the safe haven role is based on just a few dozen of the most severe trading days out of thousands.
This distinction is why the debate remains unresolved. The average correlation of an asset with the market and its behavior during extreme movements are not the same. When considering the entire dataset, cryptocurrency may exhibit characteristics of a diversifier. However, during sharp market declines, Bitcoin has tended to drop in value alongside stocks.
Both approaches are technically valid. Proponents and critics of digital gold simply analyze different datasets, arriving at opposing conclusions.
A study published in The North American Journal of Economics and Finance adhered to the second principle, analyzing periods of strong market movements. The authors concluded that gold, the U.S. dollar, and oil provide better protection against geopolitical risks than Bitcoin and Ethereum.
Jake Kenny, an analyst at Nansen, echoed this sentiment:
"In some scenarios, Bitcoin displays safe haven characteristics, but fundamentally, it remains a risk asset rather than 'digital gold.'"
Another reason for the stalemate is that the subject of the debate has changed three times. Canadian billionaire Frank Giustra outlined three stages of this evolution:
- Means of payment — as originally envisioned by Satoshi Nakamoto. This concept faded when scaling issues emerged and transaction fees rose.
- Inflation hedge — this narrative failed the test of 2022, as Bitcoin's price plummeted from a November peak of $69,000 to $16,000.
- "Digital gold" — the currently popular characterization.
Each successive interpretation replaced the previous one, which had proven inadequate. Bitcoin likely changed roles before enough data accumulated for an in-depth statistical analysis.
Hormuz as a Laboratory
A U.S. and Israeli military operation against Iran commenced on Saturday, February 28, 2026. In retaliation, Tehran closed the Strait of Hormuz to foreign shipping, with the Iranian Revolutionary Guard officially confirming the ban on March 2 for "unfriendly countries." This strait accounts for about one-fifth of global maritime oil trade and slightly less for liquefied gas.
Most traditional financial markets were closed that day, with only cryptocurrencies trading. In the first hour, Bitcoin dropped by 3.7% to $63,176, with forced liquidations of long positions exceeding $100 million. By evening, prices rebounded to $64,700.
This marked the first failure of Bitcoin's status as a safe haven. By March 6, the 30-day rolling correlation of Bitcoin with the S&P 500 reached 0.74, its highest level in a year, indicating that Bitcoin was behaving like a high-beta stock rather than a hedge against geopolitical turmoil.
However, the narrative shifted: within two weeks, Bitcoin outperformed gold, the S&P 500, and Asian stock indices.
In the week ending March 20, gold experienced an 11% decline, marking its steepest weekly drop since 1983. The conflict-driven surge in oil prices fueled inflation expectations, causing central banks to abandon rate cuts, diminishing the appeal of non-yielding gold.
The stark contrast between the initial reaction and the subsequent performance is not unique to this conflict. Analysts at BlackRock examined six shocks from 2020 to 2025 and found a consistent pattern: Bitcoin typically declines in value during the first ten days of a crisis, while gold rises, but over a 60-day horizon, cryptocurrency investments yield higher returns.
After the announcement of U.S. tariffs in April 2025, gold rose by 4% over ten days, while Bitcoin's price remained stagnant. Over two months, Bitcoin appreciated by 23%, compared to just 6% for gold.
Performance of the Nasdaq-100, metals, and cryptocurrencies since the beginning of 2025. Source: Coin Metrics, Yahoo Finance.This conclusion is inconvenient for both sides of the debate. An investor who closed their cryptocurrency position a week after the initial strikes would have realized a loss. However, one who waited until the end of March would have nearly recouped their losses, interpreting the same purchase as a delayed safe haven response.
Performance of the Nasdaq-100, metals, and cryptocurrencies since the beginning of 2025. Source: Coin Metrics, Yahoo Finance.This effect can only be validated through statistical correlation, which in 2026 behaved unpredictably.
Shifting Correlations
From January 2025, silver appreciated by 119%, gold and copper by 65%, and the Nasdaq index rose by 42%. In contrast, Bitcoin lost 31%, Ethereum 43%, and the total market capitalization of altcoins, excluding the top ten coins, shrank by 58%. This occurred despite conditions anticipated by the crypto community: a weak dollar, geopolitical tension, and increased demand for inflation protection.
In March 2026, Bitcoin's correlation with U.S. stocks surged to 0.74, while its correlation with gold plummeted to -0.88. The leading cryptocurrency mirrored stock market movements while moving in opposition to gold.
In the second quarter, the situation changed. The S&P 500 gained approximately 14% and approached record levels, yet Bitcoin did not participate in the rally, with prices fluctuating between $58,500 and $82,300.
Over four months, the correlation with stock indices shifted from near-perfect synchronization to zero. This indicated instability rather than diversification; the asset had not firmly established itself alongside stocks or metals.
Correlation dynamics between Bitcoin and gold. Source: Coin Metrics, Yahoo Finance.The statistical evidence did not support Bitcoin's assertion as the "new gold" even earlier. Statista compared the correlation of monthly returns of four assets from 2015 to 2025: gold had a weak negative correlation with the stock market, while Bitcoin exhibited a strong positive correlation. Throughout this period, the cryptocurrency behaved more like a stock than a precious metal.
Analysts at BlackRock had previously noted the volatility of Bitcoin's correlation with U.S. securities and Federal Reserve rates in a September 2024 report, stating that the asset "reflects minimal fundamental exposure" to the factors influencing the prices of most traditional instruments. Initially, this was presented as an advantage: since the cryptocurrency was not tied to the broader economic environment, it was seen as a unique diversifier. However, a year and a half later, the same trait was working against the asset.
Bitcoin lacks its own valuation mechanism; thus, its price has often been explained through its relationship with the tech sector. Analysts at CME Group noted a consistent positive correlation with the Nasdaq index throughout 2025 and early 2026, suggesting that as its prices mirrored volatile stocks, they could be evaluated based on liquidity and investor risk appetite.
Other asset classes have their own "anchors". Stocks are valued based on discounted cash flows, bonds by yield to maturity, and gold through real interest rates, central bank purchases, and jewelry demand. No such reference point exists for cryptocurrencies.
By 2026, this fragile support vanished: the correlation with the stock market broke down, yet no new benchmark emerged. Only the price remained, with nothing to compare it to.
Tim San, a senior researcher at HashKey Group, explained this divergence as a result of asynchronous pricing logic. Gold buyers focus on long-term macroeconomic imbalances and sovereign credit risks, while Bitcoin remains a "liquidity-sensitive macro asset" that responds to the actions of high-frequency traders leveraging their positions rather than those seeking protection from global economic shocks.
In June, Bitwise Europe estimated Bitcoin's fair value at $224,000, deriving this figure from its price as a hedge against default on G20 sovereign bonds. Analysts emphasized that this was an illustrative value rather than a price target.
The calculation method itself is telling. To arrive at this value, the cryptocurrency had to be linked to sovereign credit risk, which is the very factor that, according to San's observations, gold buyers consider.
For institutional holders, this is no abstraction. The size of an investment in a large fund is determined by a risk model that assesses the asset's contribution to overall portfolio volatility. An asset that rises in tandem with stock indices increases this volatility, just like stocks. Conversely, an asset that behaves oppositely during downturns reduces it and thus receives a wider limit.
In 2026, Bitcoin did not fit either of the two scenarios, and predicting its future behavior became impossible. In such uncertainty, calculations are made based on the worst-case scenario, and acceptable position sizes are reduced, regardless of future prospects.
CryptoQuant's founder, Ki Young Ju, noted on February 24 that a period of "not being digital gold" had begun, referring to the 90-day correlation of Bitcoin with gold. By August, the same measure returned to positive territory, leading the analyst to declare a return to "levels of the digital gold era." Six months, one calculation method, two contradictory conclusions.
Yet another fact is that over the past two years, institutional investments in cryptocurrencies have surged to unprecedented levels.
Hopes and Reality
The launch of spot ETFs in January 2024 changed not the prices but the composition of buyers. Investing in Bitcoin no longer required separate infrastructure; it became as simple as applying for a paper traded on American exchanges.
A significant influx of capital followed. These products attracted $35.24 billion in 2024 and an additional $21.37 billion in 2025. By August 7, 2026, the total assets of these funds had reached $79.5 billion.
The type of holder also changed. In the fall of 2025, Harvard University's endowment increased its investment in BlackRock's IBIT to $442.8 million — the largest disclosed position of the fund in the U.S. market, surpassing stakes in Microsoft and Amazon. Abu Dhabi's sovereign fund also appeared in the registry as having purchased $437 million of BlackRock's spot Bitcoin ETF in the first quarter.
By mid-2026, nearly 200 public companies, from mining firms to those accumulating Bitcoin as their primary business, held the first cryptocurrency in some capacity.
Long-term holders continued to absorb supply: by June 2026, they accounted for 16.83 million BTC, or about 80% of the total issuance — a record high. Each coin that went into a fund or a corporate balance sheet reduced the available market supply for trading.
In a September report, BlackRock cited "evolving prospects" for Bitcoin's widespread acceptance as a global monetary alternative as one factor in its long-term growth. The need for protection against the devaluation of the dollar amid a growing federal budget deficit was also mentioned as a separate argument for purchasing.
This thesis remains widely used. BlackRock CEO Larry Fink referred to Bitcoin as digital gold and a "currency of fear" in October 2025, stating that it is purchased due to concerns about national currencies.
Reversal
The first half of 2026 marked the worst period for Bitcoin ETFs in history. In the first month of summer, the currency hit a record low — a net outflow of $4.51 billion occurred. From May 15 to June 3, funds exited the segment for 13 sessions in a row, totaling -$4.37 billion.
Monthly inflow dynamics for Bitcoin-based spot exchange-traded funds. Source: SoSoValue.First-quarter 2026 reports revealed the names of sellers. Harvard University's endowment reduced its stake in BlackRock's IBIT by 43% to 3,044,612 shares and completely exited its Ethereum ETF. Emory University eliminated its position entirely, while Jane Street cut its investment by 71%. Conversely, the Mubadala sovereign fund increased its stake by 16%, approximately to $566 million, and JPMorgan raised its position by 174%.
No participant disclosed the reasons for their exits, and the 13F form is published with a delay of nearly a month and a half after the period ends.
However, by July, inflows into exchange-traded funds resumed, with a gain of $172 million for the month and $854 million in the first seven days of August. The accumulated total since January 2024 reached $52.18 billion.
The situation in the derivatives market also altered. Ki Young Ju noted that hedge funds on CME had transitioned to a net long position in Bitcoin futures for the first time. Typically, this category of market participants maintains a structural short position for basis trading.
In light of the slowing outflow from ETFs, public companies with crypto reserves acted differently: they sold coins not due to changing sentiments but mostly for payments on preferred securities.
Negative mNAV
Strategy continues to account for the lion's share of institutional demand for Bitcoin. However, Matt Hougan, the company's investment director, expressed the opinion that soon the main buyers will be pension funds, insurers, and endowments.
On June 27, the enterprise mNAV of the leading treasury firm fell below one. For a business that finances purchases through the issuance of its own shares, this situation fundamentally changed.
The mechanics hinge on one ratio: the price of a share compared to the proportion of reserves attributable to it. As long as the share price exceeds this proportion, company issuance is beneficial — the proceeds can buy more Bitcoin than is "lost" with each new "certificate," leading to more coins per share for owners.
When the market price of the share falls below the value of the Bitcoin reserve attributable to it, the opposite occurs. Each new issuance sells the investor a piece of the reserve at a discount to its true price — the company is essentially giving away Bitcoin for less than its worth. The number of coins per share decreases, and obligations must be met not through raised funds but directly from the reserve.
Thus, the rule emerges: as long as the share trades above its share of the reserve, capital raising benefits; below — it harms.
From June 29 to July 5, Strategy sold 3,588 BTC for about $216 million. This marked the first occurrence of such a sale since December 2022. The coins were sent to the market in two tranches: 1,363 BTC at $59,256 and 2,225 BTC at $60,773. The average purchase price was significantly higher — $75,476.
The "paper" loss for the second quarter totaled $8.22 billion (accounting standards require quarterly reserves to be adjusted to market prices). By early August, Strategy held 840,447 BTC and approximately $4 billion in cash.
The reason for the sale was not disappointment with cryptocurrency. Dividends on STRC's preferred securities are paid in cash and regardless of Bitcoin prices; since late June, they have been paid twice monthly at an annual rate of 11.5%.
Ki Young Ju drew a non-obvious conclusion: for the "treasury" model, a prolonged sideways market is more dangerous than a sharp price drop of the underlying asset. Investors can normally endure a sharp decline as long as they retain hope for recovery. However, an exhausting sideways trend gradually erodes this faith — demand for the company's shares decreases, and the cost of borrowing rises. Obligations, meanwhile, do not disappear.
CryptoQuant analysts provided figures: Strategy's dollar reserve shrank by 38% since the beginning of 2026, annual obligations for dividends nearly quadrupled to $1.2 billion, and the margin for payments shrank from more than seven years to 14 months.
As of August 11, 2026, all tracked Bitcoin treasuries showed a "paper" loss — totaling $15.77 billion. Strategy accounted for 62% of this, while remaining companies shared the remaining $5.99 billion.
Unrealized losses of leading treasury companies holding Bitcoin. Source: Artemis.Both institutional channels in 2026 supplied coins to the market rather than "absorbing" them. Funds reduced positions in line with changing client sentiments, while treasuries were pressured by debt obligations.
Emergency Exit
In 2024, Turkey conducted $200 billion in cryptocurrency transactions — the highest among countries in the Middle East and North Africa, with inflation reaching 85% at the time.
In Argentina, where average price growth exceeded 200% annually, turnover reached $93.9 billion. Some stores in Bolivia began pricing in USDT during the summer of 2025. Chainalysis identifies the primary use case for cryptocurrencies as savings preservation.
Inflation dynamics in Argentina. Source: Trading Economics.In these countries, digital gold functions largely according to narratives from previous years, serving as a means of exchange against an "unreliable financial system" and protecting citizens' savings from fiat devaluation.
However, in such jurisdictions, capital preservation is often achieved through dollar-pegged tokens rather than Bitcoin.
Governments have a different approach to cryptocurrencies. For instance, the U.S. Bitcoin reserve is comprised of confiscated coins; no confirmed purchases on the open market had been recorded by July 2026.
Billionaire Frank Giustra sees this "digital reserve" as a vulnerability:
"Look at the touted state Bitcoin reserve — it consists entirely of seized coins. This alone should give investors pause. Transactions are easily traceable, and when governments find themselves in desperation, they will take the path of least resistance."
An Argentine worker converting their salary into a stablecoin and the U.S. Treasury managing confiscated coins approach cryptocurrencies with different objectives. The former aims to circumvent restrictions, while the latter seeks to control assets seized from those who have overcome those barriers.
Signs of Maturity
Many experts note that over time, Bitcoin has become "calmer," making it suitable for any conservative manager's portfolio.
This position is elaborated upon by Fidelity Digital Assets. According to their calculations, Bitcoin has the best risk-adjusted returns among major asset classes. Therefore, the conclusion is that one needs to justify not buying digital gold, rather than the opposite.
Fidelity's view is echoed by other prominent market participants. ARK Invest estimated Bitcoin's annual realized volatility at approximately 42% at the end of the second quarter of 2026, close to a multi-year low. Implied volatility for the index dropped to about 35% by August 7, compared to a peak of 90% earlier in the year.
Data from Coin Metrics confirms this trend, revealing another important aspect. As of August 7, 2026, Bitcoin's 30-day volatility was 29.2% per annum, while gold's was 23%, and the S&P 500's was 12.7%. The gap with gold shrank to 1.27 times, compared to an average of 2.84 from September 2022 onward.
Comparative volatility of Bitcoin, gold, and the S&P 500. Source: Coin Metrics.The graph above shows that the volatility metrics of various asset classes are gradually converging. However, the narrowed range does not "detach" cryptocurrency from the external world.
Researchers from the Journal of Risk and Financial Management observed a statistical connection between shocks in equity and gold markets and the realized volatility of Bitcoin. Oil price fluctuations did not produce such effects. While the amplitude of price movements has decreased, external market factors still significantly influence Bitcoin's dynamics.
Much depends on the period over which volatility is measured. The annualized figure at the end of the second quarter was 42.6% over 12 months, 43.6% over 30 days, and 48.5% over six months. The same week appears differently depending on the measurement timeframe.
Finally, the calmness is akin to uncertainty. Prices fluctuate slightly for various reasons and under different circumstances: when the asset is being quietly accumulated, when interest wanes, and when the "spring is compressed" before a significant movement, either upward or downward.
A Third Path
The debate over whether Bitcoin is a risk asset or a safe haven remained unresolved in 2026, significantly influenced by relatively new factors. Funds reduced positions in line with client sentiments. "Treasury" companies sold coins due to impending payment obligations. All this is only indirectly related to investors' risk appetite.
Bitcoin shares rarity with gold. The price of both assets is primarily determined by the balance of supply and demand, rather than earnings, profits, or cash flows as with stocks. However, during crises, gold is actively purchased, while cryptocurrencies are often sold off alongside tech stocks.
Stablecoins have borrowed Bitcoin's role as a daily payment method for those who prioritize price predictability. An Argentine worker converting their salary into USDT is not disillusioned with digital gold but seeks stability "here and now."
Bitcoin remains a risk asset, even though its prices often move contrary to securities. The extent of price fluctuations is decreasing, and declines during bear phases are becoming less severe — the bottom is not as deep as in previous cycles.
According to CryptoQuant, if the current structure replicates previous cycles, the bear phase will conclude no later than December of this year. Then, as usual, comes the accumulation phase followed by a subsequent bull run — likely with new historical highs.
Comparison of Bitcoin's performance across various market cycles. The starting point is the halving. Source: Bitcoin Cycles Comparison.The primary risk on this path is a sell-off from "treasury" companies. If a "domino effect" occurs, long-term support levels may falter, and the anticipated turnaround may be delayed.
In such a scenario, miners could also face challenges: according to JPMorgan, around 20% of them are already operating at a loss, with an average mining cost of $78,000. However, similar shocks have occurred before, and the share of mining companies in overall coin supply is gradually decreasing.
Regardless, during capitulation, "smart money" typically does not exit the market but rather increases positions.