Bitcoin Keeps Outperforming Other "Safe Haven" Assets

0:00Gold bonds and Bitcoin are the truth-tellers of financial markets, and right now they are doing something that no one expected. We recently saw gold crash down to$4 ,100 per ounce. Bonds continue pushing higher, and Bitcoin's up around 8 % since the start of the war. So why is all this happening? What are these assets telling us about what's likely to come next? Well, let's start with bonds first. Trillions of dollars have poured into U.S. Treasuries over the years. Investors find the bonds attractive because they have deep liquidity. There's near-zero credit risk. There's predictable income and there's tax advantages at the state and local level.

0:31But normally during times of uncertainty, treasury prices appreciate and yields are pressured lower due to the increased demand for the bond. But that demand comes from investors that are seeking refuge from large potential losses in stocks and corporate bonds. The U.S. government is largely seen as the ultimate backstop in financial markets. And so the government's bonds are deemed the least risky thing to own. Makes sense, right? But we've seen the exact opposite happen during the Iran conflict. Yields are up and treasuries are down. That's not supposed to happen. This is because oil prices have spiked hard and that introduces the classic stagflation risk.

1:05That stagflation risk deters the Fed from cutting interest rates and it reignites inflation fears. Now those inflation fears change the calculus for investors and it prevents them from driving yields down and treasuries up. Treasuries have actually been one of the worst performing major assets since February 28th. That's the exact opposite of the usual playbook. Treasuries are supposed to be the safe haven. but they've just lost you money. But what if the weird reaction in the bond market was then met with a once-in-a-lifetime threat for participating? Wait, what? What if you could have a missile shot at you for buying treasuries?

1:37I'm not joking here. This isn't a hypothetical situation. Last night, the Speaker of the Islamic Republic of Iran's Parliament put out an unhinged tweet. It reads, alongside military bases, those financial entities that finance the U.S. military budget are legitimate targets. U.S. Treasury bonds are soaked in Iranians' blood. Purchase them and you purchase a strike on your headquarters and assets. We monitor your portfolios. This is your final notice. Now, how serious is this threat? I have no idea. But the idea that financial institutions could potentially become targets of a country that the U.S.

2:13is actively engaged in kinetic combat with, well, that's unsettling to say the least. Will this proclamation deter people from buying treasuries? Probably not. But weirder things have happened in the past. And this latest threat is just another example of Iran's strategy to deal with the current conflict. They've been launching missiles and drones into American military bases. And they also have been attacking energy infrastructure of various neighboring countries in the Middle East. They've shut down the Strait of Homoz. And they attacked multiple ships that tried to navigate the perilous waters.

2:41And this weekend, the largest state sponsor of terrorism threatened to cut the subsea internet cables in the strait. This strategy reminds me of an old Reddit post. That post explains why you never want to fight an insane person. It says never fight or argue with an unpredictable, mentally unstable, or irrational person. They often lack restraint. They use dirty tactics and they will drag you down to their level, resulting in a loss regardless of the outcome. They pose a higher danger because they are unpredictable and they lack fear. Now, this lack of predictability, coupled with the desire from Iran to maximize damage, that has put the United States in an unusual situation.

3:18We can stop bombing the country and claim victory at any point. We control that. There's no promise that Iran would stop attacking their neighbors, though, or that they'd stop funding terrorism globally, or that they would cease their pursuit of a nuclear weapon. The United States is not standing around waiting to see what happens either way. Treasury Secretary Scott Bessent recently announced that sanctions against Iran's oil at sea, those would be temporarily lifted with the hopes of driving oil prices lower. Take a listen to his explanation on why they're doing this. Why is the U.S. helping to fund a country that it's currently at war with, Mr.

3:50Secretary? Again, Kristen, why don't we have good facts here? That Iranian oil was always going to be sold to the Chinese. It was going to be sold at a discount. So which is better, Kristen? Which is better? If oil prices spiked to$150 and they were getting 70 % of that, or oil prices below 100. It's better to have them where they are now. And to be clear, we had always planned for this contingency. About 140 million barrels are out on the water. In essence, we are jujitsu-ing the Iranians. We're using their own oil against them. We have a much better line of sight, to be clear, at Treasury when this oil goes to, if it goes to Indonesia, if it goes to Japan, if it goes to Korea, we have a much better line of sight and are able to block accounts that the oil goes into.

4:48When it goes into China, it completely gets recycled. So to be clear, that$14 billion number is grossly overstated. Jiu-jitsu-ing the Iranians. What a line. During times of uncertainty like this, we would expect to see gold's price appreciate rapidly. Investors tend to seek safe haven assets and they want to insulate themselves from incoming currency debasement needed to fund a war. But that is not what has happened in this conflict. Gold has been plummeting and the precious metals now down about 13 % since the start of the war. Some people are going to claim that the sell-off is due to a potential Fed interest rate hike, but I don't think that's correct.

5:25I actually think that's wrong. I'm much more convinced that a liquidity crisis is underway for people, organizations, and countries in the Eastern world. These are the same groups that were aggressively buying gold in the last two years. So if you put it against the backdrop of a strengthening dollar, these gold holders are likely looking for liquidity. And so selling gold is an easy way to raise cash. And then that brings us to Bitcoin. The digital currency has been the unsung hero of the conflict. Ash Crypto shows that Bitcoin is up 34 % against gold since the US-Iran war started 23 days ago.

5:56There are multiple drivers of this outperformance, but I truly do believe the world is recognizing Bitcoin's attractive attributes. It's a non-sovereign, decentralized asset that can be moved anywhere in the world within seconds. A store of value that doesn't require an airplane to move it. That's quite attractive in the world that we're headed towards. So until the war ends, my expectation is that oil is going to go higher, bonds and gold will stay under constant pressure, and Bitcoin will outperform other store of value assets. This may not be what investors expected going into the conflict, but here we are.

6:27Open your eyes, pay attention. it. Your academic textbook can't change reality. It doesn't matter what was supposed to happen. You have to look at what has happened. Remember, we also know that financial markets are going to rip higher immediately if the Iran war comes to an end. We know this because President Trump told reporters later on Friday, America was close to winding down the war. What happened? Stocks went green almost immediately in after hours trading. So investors are all playing a game of chicken right now. How much pain are we willing to withstand on the hopes that Trump and his administration are close to a ceasefire.

6:59We know it's going to be valuable to be invested when the pivot comes, but it's nearly impossible to get the timing right. This means you have to eat the drawdown in your portfolio and just hold on, or you've got to be out of the market and risk missing the fast recovery. Every investor has got a different strategy. Me, I'm just staying invested. But one thing is clear. Financial assets are responding to bombs in the Middle East, oil prices domestically, and with the man in the White House tweets. What a time to be alive. But maybe to end today, let's check in with Maria Bartiromo. She spoke directly with President Trump this morning about his plans in Iran.

7:34Here's what she had to say. I just spoke with President Trump and he told me that Iran wants to make a deal badly. He said that the talks have been ongoing. I said, how much longer will this conflict go on? He said the talks, I said five days to halt or postpone strikes on the electrical infrastructure. It could happen sooner, he said. But I have put down five days. I asked him what his reaction is to Iranian state television, saying that there are no talks. And he said he's not sure what they are referring to because the most recent talks happened, in fact, last night with Steve Whitcoff and Jared Kushner and their counterparts.

8:20When I asked about the Iranian TV saying that no talks have happened, he said it's hard to get any information there because of the U.S.'s blowing up so much of their infrastructure. So again, he wasn't sure what Iran state TV was talking about because the most recent talks, he said, happened last night with Steve Whitcoff and Jared Kushner. Again, the president just told me moments ago that the Iranians want to do a deal badly. So there you have it, folks. The U.S. wants to get a deal done. Will we do it? I don't know. But if we get it done and the war ends, investors are going to be very happy.

8:59So hopefully the war's over quickly and we can get back to normal sooner rather than later. That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube. We currently have just over 45 ,000 subscribers and my goal is to get to 1 million. So hit that subscribe button to get more videos like this and I'll see all of you live tomorrow from the desk of Anthony Pompliano.