Long has Bitcoin been affected by the ebbs and flows of macro factors in the economy. Interest rate expectations, US job reports, money supply.

Not anymore, says CoinShares’ head of research, James Butterfill.

“Macro data has been demoted as a driver of Bitcoin,” Butterfill said in comments shared with DL News. “Geopolitics has been promoted. For now, that transition is working in Bitcoin’s favour.”

Butterfill is referring to the knock-on effects of a new war in the Middle East, and how that is affecting Bitcoin to the upside.

He argued that investors are largely ignoring the usual suspects that would’ve previously induced some hefty volatility — like last week’s US job numbers, which came in well below expectations — and ploughed into the top cryptocurrency instead, treating it as a hedge against the geopolitical turmoil unravelling in the Middle East.

Indeed, Bitcoin is up 6% since the conflict between the US and Israel on one side and Iran on the other began. Gold has gained 1% and equities have fallen in the same time.

As the war in the Middle East wages on, a trifecta of supposedly adverse factors should be walloping Bitcoin, argued Butterfill.

Oil prices look set to keep rising, and there’s a renewed risk of surging inflation around the world as energy costs increase. With the uptick in energy prices comes lower expectations for an interest rate cut — these hit 23% in the US, their lowest level this cycle — and a weaker economic growth outlook.

In that environment, typically, Bitcoin would sell off. Instead, the opposite has happened, and investors should take note.

“This divergence is analytically significant,” wrote Butterfill.

Nowadays, all eyes are on oil.

Just yesterday, Iran warned the world that the price of oil could double — to $200 per barrel — if the US and Israel continue to strike.

While everyone is watching the price of oil, Butterfill is also watching to see what institutions are doing.

Already, institutional investors have recorded three consecutive weeks of net inflows into crypto-related products.

That’s telling.

“We read this as a meaningful signal: institutional investors are treating Bitcoin as an asset worth holding through geopolitical turbulence, not one to be exited,” wrote Butterfill.

Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.