Bitcoin Drops 1.3% Amid Middle East Tensions, S&P 500 Rises 0.94%

Bitcoin (BTC) maintained a relatively stable position in recent trading, experiencing a minor decline of 1.3% to $105,552 over the past 24 hours. This stability comes amidst escalating tensions in the Middle East, where drone strikes have hit Tehran and Tel Aviv, and U.S. President Donald Trump has warned Tehran residents to evacuate immediately. Despite these developments, Bitcoin's performance has mirrored the steady rise of the S&P 500 index, which increased by 0.94% in the past 24 hours and has seen a 0.3% gain since Israel's attack on Iran last Friday.

Trump's remarks on Tuesday morning indicated a desire for a comprehensive resolution to the conflict between Iran and Israel, aiming for more than just a ceasefire. This geopolitical uncertainty has led some institutional investors to view the current situation as a potential buying opportunity. However, the majority of investors do not anticipate significant short-term increases in Bitcoin's value. According to data from an on-chain prediction market, over 77% of predictors do not expect BTC to close above $107,000 today.

Analysts suggest that Bitcoin's price may remain within the $103,000 to $109,000 range until there is more clarity regarding the U.S.'s involvement in the conflict. Rajiv Sawhney, Head of International Portfolio Management at Wave Digital Assets, believes that while significant short-term increases are unlikely, large-scale liquidations are less probable due to overleverage and excessive open interest. Institutional investors are expected to continue buying BTC over the medium term, as risk assets face defensive positions amidst the escalating tensions.

Illia Otychenko, Lead Analyst at CEX.IO, views Bitcoin's resilience during the Middle East tensions as a confirmation of its growing role as a hedging asset. Historically, Bitcoin has initially moved in sync with traditional risk assets during geopolitical uncertainty but has shown a stronger recovery once the initial panic subsides. This pattern is evident in Bitcoin's quick rebound after briefly dipping below $102,000, attributed to its structural optimism and forward-looking market nature.

Jamie Coutts, chief crypto analyst at RealVision, suggests that Bitcoin's recent stability indicates it is increasingly perceived as less of a "risk-on" asset. While fast money traders still treat BTC as a risk-on asset, its medium-to-long-term trajectory is shaped by large allocators who see it as a non-sovereign, neutral bearer asset, similar to digital gold. This perception may explain why Bitcoin trades like a risk asset in the short term but shows resilience during geopolitical events.