Here's how the Iran conflict may have helped crypto prices recover, even as stocks struggle

MW Here's how the Iran conflict may have helped crypto prices recover, even as stocks struggle

By Christine Idzelis

Bitcoin and ether are up so far in March, unlike the S&P 500 and U.S. Treasurys

The price of ether is down more than bitcoin in 2026 - but both cryptocurrencies have posted sharp gains so far this month.

Cryptocurrencies are beating stocks and bonds in March, outperforming amid the Iran conflict as equities struggle globally with elevated oil prices.

Although declines in the prices of bitcoin (BTCUSD) and ether (ETHUSD) this year have been far greater than losses in the U.S. stock market, both cryptocurrencies have been outperforming the S&P 500 SPX this month amid concern that a prolonged war will keep oil prices (CL00) high and push up inflation.

Crypto's outperformance may be partly because fighting in the Middle East has people in the region concerned about accessing their local banking systems, said Stephen Coltman, head of macro at 21shares, in an interview. Many international people live and work in the Middle East and may want to leave the region for a while. They may be moving money into crypto, as they can access it even if they need to cross an international border because of the conflict.

"If you're somebody in Dubai or Abu Dhabi" and suddenly worried about losing access to the banking system and needing to leave quickly, bitcoin may appear to be an "attractive place to put your assets," Coltman said. At the start of the war, stock exchanges in Dubai and Abu Dhabi temporarily closed down, whereas as bitcoin trades "24/7" and is "always available," he noted.

Crypto investors have been on a wild ride over the past year, as a roaring bear market turned into another punishing crypto winter.

Bitcoin has plunged around 20% so far this year based on midday trading levels Thursday, while ether - the second-largest cryptocurrency based on market value - has seen a steeper plunge of around 30%, according to FactSet data, at last check. Prices of many other altcoin and meme-coin tokens have seen substantial declines as well.

Ether prices are down more than 58% from their all-time intraday high of $4,955.23 on Aug. 24, according to Kraken data midday Thursday.

The iShares Ethereum Trust ETF ETHA, which is the biggest ethereum exchange-traded fund listed in the U.S., has rallied 8.1% in March through Wednesday, reducing its plunge this year to around 30% through that date. The iShares Bitcoin Trust ETF IBIT was up 7.7% this month through Wednesday, paring its large drop in 2026 to 19.3%.

Bitcoin ETFs listed in the U.S. have seen more than $860 million of outflows in 2026 through Wednesday, in contrast to $22.7 billion of inflows over the past year, according to FactSet data.

But flows into bitcoin funds have recently started to turn around, with bitcoin ETFs broadly attracting $659 million over the past month, including $244 million just on Wednesday, FactSet data show. Ethereum-focused ETFs haven't been so lucky; they registered outflows of around $274 million over the past month, including $39 million over the past week after a $16 million inflow on Wednesday, FactSet data show.

Looking more broadly at crypto ETFs listed in the U.S., "investors haven't pulled out a lot of money" this year through March 9, despite steep declines seen in bitcoin and other cryptocurrencies, said Aniket Ullal, head of research and analytics at CFRA Research, in a phone interview. "There has been a reversal of the inflows, but it's not substantial."

In 2025, crypto ETFs saw about $42 billion in inflows, he noted.

Determining where bitcoin buyers are clustering can be extremely difficult. Bitcoin wallet addresses are pseudonymous and include no identifying metadata, so geographic attribution of flows isn't possible solely by analyzing public data from the blockchain, according to a representative at Glassnode, which provides data and intelligence about the crypto market.

A report published by Chainalysis earlier this month found that Iranians were moving crypto off Iranian exchanges, and choosing to either "self-custody" it - that is, move it off the exchange into a wallet they control - or shift it to a foreign exchange. The thinking is that Iranian exchanges may be vulnerable to cyberattacks, as the country's largest crypto exchange, Nobitex, experienced a major hack in 2025. Still, the pace of growth in the country's crypto industry has accelerated over the past year, the Chainalysis team said.

'Oversold'

Another factor that might be contributing to the rebound: Cryptocurrencies such as bitcoin and ether appeared "oversold" before the Iran conflict, according to Jim Ferraioli, director of digital-currencies research and strategy at Charles Schwab,

Cryptocurrencies can be extremely volatile. Many of these coins are "sentiment" driven and tend to follow the direction of bitcoin, but with even bigger swings, Ferraioli said by phone. "Every single cryptocurrency that is not bitcoin just trades like a levered play on bitcoin."

Despite a difficult market in crypto, firms have continued to roll out new ETF products. New entrants include the Grayscale Sui Staking ETF GSUI and Bitwise Chainlink ETF CLNK, according to Ullal. And on Thursday, BlackRock launched the iShares Staked Ethereum Trust ETF ETHB, which is designed to provide investors exposure to spot ether prices as well as potential income from staking a portion of its holdings in the cryptocurrency.

"Digital assets have come under price pressure over the last several months," said Jay Jacobs, BlackRock's U.S. head of equity ETFs. Yet "there's a pretty significant divergence between what we're seeing in the short-term prices in digital assets versus the secular trend of growing interest" in them, he said, citing BlackRock's conversations with clients.

As for traditional financial assets, the U.S. stock market was trading sharply lower Thursday, with the S&P 500 down 1%, according to FactSet data, at last check. The S&P 500 has slid 2.5% in March, while the U.S. bond market, as gauged by the iShares Core U.S. Aggregate Bond ETF AGG, has lost 1.6% based on trading around midday Thursday.

International stocks have been under even more intense selling pressure since the Iran conflict began at the end of February. The iShares MSCI ACWI ex-U.S. ETF ACWX, which tracks stocks globally but excludes the U.S., has slumped more than 7% so far in March as of midday Thursday. Bitcoin was edging up in early-afternoon trading Thursday, adding modestly to sharp gains month to date, according to FactSet data, at last check.

Joseph Adinolfi contributed

-Christine Idzelis

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March 12, 2026 13:01 ET (17:01 GMT)

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