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Although many crypto investors flee to bitcoin (BTC) as a safe haven, it hasn’t performed particularly well during times of war. Consider its underperformance against other tech investments during the onset of a conflict.
Despite US President Donald Trump’s 53 assurances that the Russia-Ukraine war would end “on day one,” that conflict continues.
Worse, a new war just started in Iran, giving us a recent example against which to analyze BTC as an ostensible safe haven asset.
BTC often correlates with the NASDAQ-100 index, the largest proxy for the tech industry. However, many military headlines have driven BTC to decouple from the NASDAQ to the downside.
On Monday, for example, Trump surprised the world with a sudden post to TruthSocial asking everyone in Tehran to evacuate immediately. That plea, made at 6:30pm New York time to a metro area of over 15 million people, immediately tanked NASDAQ-100 constituents in after-hours trading.
The NASDAQ 100-tracking QQQ ETF, which had been trading north of $533.70 prior to the announcement, traded 0.15% lower within two minutes and 0.6% lower within 90 minutes.
Those percentages aren’t to be mistaken as insignificant. For an index as large as the NASDAQ — which itself is tied to the largest economy in the world — a loss of 0.6% reflects a loss of approximately $300 billion in US public market capitalization.
BTC, however, fared far worse during the same period.
Prior to Trump’s announcement, BTC was trading above $108,700. Within 90 minutes, it had declined 1.8%.
Indeed, BTC fell 3X further than the NASDAQ within 90 minutes of conflict breaking out.
BTC doesn’t seem to be a safe haven
The same effect of BTC decoupling from the NASDAQ during wartime headlines occurred at the onset of the Russia-Ukraine conflict.
Late on the evening of February 23, 2022, Vladimir Putin announced a “special military operation” against Ukraine that, like Trump’s TruthSocial post this week, marked the de facto commencement of war.
By the NASDAQ 100’s 9:30am open of trading on February 24, 2022, the index had crashed a staggering 3.2%.
BTC, however, performed even worse than this spectacular incineration of over $1 trillion in US public market capitalization. By the morning of February 24, BTC had fallen over 10% below its high of the previous day.
Yet again, the episode illustrates BTC underperforming the NASDAQ by a 3X multiplier.
Read more: No, California didn’t pass a law to seize your idle bitcoin
More examples of BTC failing to buoy investors seeking a safe haven are plentiful. From the India-Pakistan crisis earlier this year to as far back as late-2010s incidents of military strikes in the South China Sea, BTC hasn’t performed effectively as a hedge.
Instead, BTC has often mirrored or even amplified the moves of risk-on assets during wartime crises.