U.S. President Donald Trump said Monday the White House is in contact with what he described as a “respected” IranianGold Breaks, Bitcoin Rallies as Iran War Scrambles Safe Havens figure and claimed Tehran is now pushing for a deal to end the war as it enters its fourth week. He also extended a deadline for Iran to reopen the Strait of Hormuz, giving it five more days before the U.S. moves ahead with strikes on Iranian power infrastructure.
The shift marked a sharp reversal from the weekend, when Washington and Tehran traded threats that raised the risk of widespread power outages across Iran and the Gulf, including disruptions to desalination plants that supply drinking water across the region. Trump said U.S. envoy Steve Witkoff and Jared Kushner held talks Sunday night with Iranian counterparts, though he did not identify the official involved.
Markets reacted immediately. Oil prices dropped and equities stabilized as traders moved off worst-case supply disruption scenarios and began pricing in a potential de-escalation.
Oil prices fell sharply on Monday after U.S. President Donald Trump announced a five-day pause on planned U.S. military strikes against Iran, following what he described as “very good and productive” talks aimed at resolving tensions in the Middle East. Trump later told Fox News that high-level talks involving U.S. special envoy Steve Witkoff, peace envoy Jared Kushner and their Iranian counterparts took place on Sunday night, adding that a resolution to the conflict could be reached within five days or less. Brent crude for May delivery was down 12.06% to trade at $98.06 per barrel at 3.41 p.m.ET, while the corresponding WTI crude contract shed 10.58% to change hands at $87.84/bbl.
Interestingly, safe haven markets have continued their recent divergence, with gold extending its latest selloff while Bitcoin continued to rally. Spot gold was down 2.2% to trade at $4,395 per ounce at noon, but pared some of those gains later in the day. At the same time, Bitcoin gained 3.0% to trade at $70,713 earlier in the day, turning that into 4% gains by 4:00 p.m.
The Iran conflict is piling confusion into safe-havens, with gold also facing pressure from inflation fears and potential interest rate hikes, while Bitcoin has been outperforming traditional assets.
While gold initially surged to record highs above $5,400 following the outbreak of the war, it has since plummeted nearly 22% from its late January peak of over $5,590 per ounce, with the safe-haven failure primarily attributed to a massive unwind of what had become the market's most crowded trade. Massive speculative capital and leveraged bets had poured into gold throughout late 2025 and early this year, leaving the market vulnerable to a "stampede-like" sell-off when sentiment shifted.
While the war initially boosted gold, the resulting surge in oil prices above $110 per barrel shifted the narrative from a geopolitical shock to an inflation shock. Surging inflation led markets to price in rate hikes instead of cuts. High interest rates increase the opportunity cost of holding non-yielding gold, favoring yield-bearing assets like bonds.
The Federal Reserve recently held interest rates steady at 3.5%-3.75% in March, marking a pause in cuts as policymakers weigh inflation risks from the Iran war against a softening labor market. Traders are now betting on an additional 20-44 basis points of rate increases by the end of 2026, reversing previous forecasts for cuts. In a panic-stricken market, investors and institutions have sold gold--one of their most liquid and profitable assets–to raise cash for margin calls or to cover losses in crashing equity markets.
In contrast, Bitcoin has demonstrated unexpected resilience, mostly outperforming gold and stocks during the war, though it remains highly volatile. Institutional inflows into Bitcoin ETFs have been surging, with the cryptocurrency’s 24/7 tradability allowing it to reprice geopolitical shocks faster than traditional markets. Bitcoin began bucking its usual correlation with technology stocks after the Middle East war erupted in late February, gaining nearly 10% at a time when major tech and broader market indices like the S&P 500 declined. The war has helped Bitcoin claw back some of its early-year losses wherein it was cut in half from its September all-time high of ~$126,200 driven by a "crypto winter" characterized by low market liquidity, reduced trading volumes as well as waning hype-driven demand.
That said, Bitcoin's behavior during times of war has been complex, acting as both a volatile risk asset and a 24/7 liquidity sink. While sometimes it fails to act as a safe haven, Bitcoin is increasingly treated as a macro asset tied to liquidity, often rebounding quickly from oil-fueled retreats. The price has spiked on news of delayed military action, including Trump delaying strikes on Iran, showing sensitivity to headlines that imply a reduction in immediate geopolitical risk. However, recent data has revealed a high correlation of nearly 90% between Bitcoin and the S&P 500 during crises. This means that Bitcoin is not necessarily acting as a "safe haven" like gold, but rather moving based on institutional macro sentiment.
Meanwhile, the U.S. dollar has emerged as the preferred safe haven. The U.S. Dollar Index--a metric that pits the greenback against a basket of six leading international currencies--has rallied nearly 300 basis points since the onset of the US-Israel strikes on Iran, marking its best performance in months. The inflationary shock from higher oil prices led markets to price in a higher likelihood of "higher-for-longer" interest rates from the Federal Reserve, boosting the dollar's value. Further, economic turmoil in emerging markets has triggered capital flight back into U.S. assets, further strengthening the dollar.
By Alex Kimani for Oilprice.com
