Author: Blockchain Knight
At the time of the outbreak of the conflict between Israel and Palestine, Bitcoin experienced a drop on the day of the conflict, but subsequently showed a strong rebound, reaching $70,000 last night. Let’s take a look at Bitcoin's performance during geopolitical crises through a report from BlackRock.
The report released by BlackRock pointed out that Bitcoin demonstrates a unique hedging value that differs from traditional assets during periods of market turmoil such as geopolitical conflicts and financial crises, making it an important choice for hedging global financial, monetary, and geopolitical risks.
As the first widely adopted internet-native currency tool globally, Bitcoin fundamentally addresses the pain points of traditional currency such as inflation devaluation, cross-border transaction friction, and restricted access.
Bitcoin presents characteristics of low correlation in the long term and short-term linkage with traditional assets, with a 10-year correlation coefficient of only 0.2 with the S&P 500, similar to gold. The short-term connection is often triggered by fluctuations in actual interest rates or liquidity of the dollar, and after the connection occurs, it quickly rebounds, with fundamentals ultimately dominating its trend.
This characteristic allows Bitcoin to demonstrate unique value during significant events such as geopolitical conflicts and financial crises.
In key events such as the 2020 U.S.-Iran conflict, the 2023 U.S. regional banking crisis, and the announcement of global tariffs in 2025, Bitcoin, despite experiencing slight short-term market fluctuations, rapidly rebounded and achieved significant positive returns thereafter.
During the U.S.-Iran conflict, Bitcoin rose 26% over 60 days; during the U.S. regional banking crisis, it rose 25% over 60 days; and during the tariff event in 2025, it rose 23% over 60 days. In contrast, traditional assets such as the S&P 500 performed far worse in such events compared to Bitcoin.
Even in extreme market conditions like the outbreak of the COVID-19 pandemic in 2020 and the Russia-Ukraine conflict in 2022, Bitcoin was able to quickly recover after a short-term drop, showing strong recovery capability.
The report analyzes that Bitcoin's short-term irrational volatility stems from its 7×24-hour trading and instantaneous settlement features, making it susceptible to being sold off during periods of tight liquidity in traditional markets. At the same time, the crypto market and investor understanding are still in an immature stage, but these short-term fluctuations do not obscure its fundamental advantages.
Bitcoin has no traditional counterparty risk and does not depend on any centralized system. Its long-term adoption trajectory is driven by concerns over global monetary stability, geopolitical stability, and the degree of concern over U.S. fiscal and political stability.
This logic is precisely the opposite of traditional risk assets and is also the core reason why it can become a "hedging choice" during times of market panic.
It is worth noting that Bitcoin as a single asset still carries unique risks such as high volatility, regulatory uncertainty, and an immature ecosystem, but its risks do not significantly overlap with those of traditional assets.
A low proportion moderate allocation can effectively improve the risk-adjusted returns of an investment portfolio, diversifying fiscal, monetary, and geopolitical risks, which is precisely the core aspect that cannot be defined within the traditional "risk appetite/hedging" framework.
Overall, while Bitcoin may be correlated with traditional assets in the short term, in the context of heightened geopolitical tensions and increasing global financial and political uncertainty, its unique recovery capability and return performance demonstrated during past crises make it a scarce asset for hedging related risks within investment portfolios, with significant long-term diversification value.
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