The Capital Maze Under the Shadow of War: How Virtual Currencies and U.S. Stocks Are Repricing Amid Middle East Firefights

In March 2026, the skies over the Middle East are once again illuminated by war.

As the US-Israel coalition's precise strikes on Iran cut through Tehran's night sky, the global capital markets' reactions have shown unprecedented complexity—virtual currencies initially plummeted then rebounded, U.S. stocks faced pressure and diverged, gold and oil soared simultaneously, and there were both 100,000 liquidations and $458 million in ETF net inflows. This geopolitical storm is reshaping investors' traditional notions of "risk" and "safe haven."

1. Virtual Currencies: Another Test of the "Digital Gold" Myth

On February 28, Beijing time, news of the US-Israel joint strikes broke, and Bitcoin plunged over $1,000 within minutes, touching a low of $63,030. Within 24 hours, it fell more than 6%, with over $400 million in contracts liquidated and more than 100,000 traders wiped out. This performance disappointed investors who expected Bitcoin to serve as a safe haven in turbulent times.

However, a dramatic turn followed. When Iran confirmed the death of its Supreme Leader Khamenei in the attack, cryptocurrencies collectively rebounded sharply. Bitcoin briefly surged past $70,000, with mainstream tokens like Ethereum and Solana rising over 8%. As of March 4, Bitcoin was still oscillating around $67,000.

This "collapse then rally" pattern reveals the dual nature of virtual currencies during wartime.

On one hand, they indeed act as a "24/7 liquidity valve." Hayden Hughes, Managing Partner at Tokenize Capital, noted: "Bitcoin is the only large liquidity asset traded around the clock, so it absorbs all the selling pressure usually spread across stocks, bonds, and commodities." This means that during weekends when traditional markets are closed, cryptocurrencies become the only outlet for global capital to vent panic.

On the other hand, Bitcoin's rebound was not driven by safe-haven demand but by short covering after initial market pricing of geopolitical shocks. Pratik Kala, Head of Research at Apollo Crypto, believes Bitcoin has been oscillating between $65,000 and $70,000 since February, and corrections after breakthroughs are normal. Bohan Jiang, senior derivatives trader at FalconX, observed that Bitcoin remains in a "hold-shortage" state, with most clients reluctant to chase prices higher.

A more convincing signal comes from the options market: implied volatility spiked to 93% for a day but quickly retreated, indicating traders were hedging event risks rather than preparing for long-term upgrades. This confirms a harsh reality—when faced with true "black swan" events, Bitcoin remains a high-risk asset. The term "digital gold" is more of a slogan that has yet to gain widespread market acceptance.

2. U.S. Stocks: The Collapse of the "Three-Legged Stool" and the 6800-Point Battle

When war ignited in the Middle East, Wall Street's response was even more complex.

On March 3, the three major U.S. stock indices opened sharply lower, with the Dow dropping over 900 points at one point, and the Nasdaq falling more than 2%. The S&P 500 broke below its recent clear range, with the 6800 level shifting from support to resistance, and the market quickly shifted from "buying on dips" to "risk control" mode.

Goldman Sachs' trading division described the current predicament of U.S. stocks as a "collapse of the three-legged stool." The three pillars supporting the market's strong performance over the past year—long-term tailwinds from the AI revolution, cyclical momentum from the post-pandemic "echo boom," and expectations of imminent Fed rate cuts—are all being struck simultaneously by geopolitical conflict.

The first cracks appeared in the AI theme. Market focus shifted from the "AI revolution" to "AI disruption," with software sector valuations under immense pressure. The escalation of the Iran conflict further shook the cyclical momentum and rate cut expectations.

Rising energy prices became the key catalyst breaking the balance. Since the conflict escalation, Brent crude futures have risen about $10 per barrel. Goldman Sachs estimates that every $10 increase in oil prices could weaken U.S. GDP growth by roughly 10 basis points; if oil prices continue rising by another $10, core CPI could be pushed up by 4 basis points, and overall CPI by 28 basis points.

This means that in a world where inflation could return to 3%, the theoretical basis for Fed rate cuts would be undermined. For the S&P 500, with a P/E ratio of 22, any uncertainty about economic growth and corporate earnings could trigger disproportionate and sharp corrections.

Meanwhile, risk assets are retreating. European markets also suffered heavy losses, with the FTSE 100 down 2.71%, and Germany's DAX dropping over 1,000 points at one point. Asia-Pacific markets were similarly pressured, with the MSCI Asia-Pacific index experiencing its largest two-day decline since August 2024.

3. Linkages and Divergences: The Complex Game Among the Three

In traditional analysis, war typically drives capital from risk assets to safe havens—stocks fall, gold rises, and Bitcoin should move in tandem with gold. But this time, the situation is far more complex.

First layer: Synchronization of risk assets. During panic, Bitcoin and U.S. stocks show high positive correlation. On March 3, both declined simultaneously, indicating a broad withdrawal from risk assets. GTC Zehui Capital pointed out that Bitcoin's recent price movements demonstrate an increasing correlation with traditional high-risk assets.

Second layer: Divergence between Bitcoin's "weekend effect" and U.S. stock "opening price discovery." Since cryptocurrencies trade 24/7, they act as a liquidity "pressure valve" over weekends. But true price discovery occurs when U.S. markets open on Monday. Hayden Hughes warned: "If Bitcoin ETF investors decide to withdraw, Bitcoin could quickly fall below $63,000."

Third layer: Inflation expectations and policy outlooks. War pushes up oil prices, which increases inflation, constraining rate cuts—this transmission chain is directly negative for stocks. But for Bitcoin, the logic isn't entirely consistent. Arthur Hayes, co-founder of BitMEX, suggests that the deeper the U.S. intervenes in Iran, the more likely the Fed is to cut rates or print money to support war spending, which could push Bitcoin prices higher.

Fourth layer: Divergence signals in ETF fund flows. Despite Bitcoin's volatile price, U.S. spot Bitcoin ETFs recorded net inflows of $458 million after the conflict, making it one of the strongest single-day fund inflows this quarter. This indicates that institutional investors view the volatility caused by war as a "manageable shock" rather than systemic risk. This contrasts sharply with retail investors' large-scale liquidations.

4. The Fire Rewrites the Capital Map

As of March 4, the passage risk through the Strait of Hormuz remains volatile, and Iran has suspended stock trading until next week. The substantial impact on global energy supplies is still uncertain, but Goldman Sachs has sharply raised its European natural gas price forecast for the first half of 2026 by about 50%.

For investors, the current market environment features several key characteristics:

First, cross-asset volatility will become the norm. Sharp fluctuations in energy markets will not be confined to commodities but will spill over into equities, bonds, and cryptocurrencies.

Second, geopolitical risk premiums are being re-priced. Whether in oil, gold, or Bitcoin, markets are searching for new equilibrium points. Wang Peng, deputy researcher at the Beijing Academy of Social Sciences, pointed out that the impact of this conflict is likely to be characterized by "short-term shocks, medium-term divergence, and limited long-term effects."

Finally, traditional asset classification frameworks are being challenged. Bitcoin is both a risk asset and, at certain times, exhibits safe-haven properties; gold is a traditional safe haven but faces pressure from rising real interest rates; U.S. stocks must digest the negative impact of rising energy costs while weighing the structural benefits for defense, energy, and other sectors from geopolitical conflicts.

In this capital maze, the only certainty is uncertainty itself. As war rages in the Middle East, global financial markets are redefining the boundaries of "risk" and "safe haven"—and this boundary is far more blurred than textbooks suggest.

(This article does not constitute investment advice. Markets carry risks; invest cautiously.)#深度创作营