By Suvashree Ghosh and Emily Nicolle

(Bloomberg) -- Bitcoin is struggling to maintain an upswing in momentum even as global markets recover, after days of volatility caused by the ongoing conflict in Iran.

The original cryptocurrency dropped as much as 2.1% on Thursday to a low of $71,777, having advanced around 9% a day earlier during US hours. Sentiment appeared to recover slightly as European and US trading got underway on Thursday, with the token swinging between gains and losses in early morning in New York.

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For much of the week, crypto traders had appeared more positive relative to investors in other assets like equities and gold, which saw significant selloffs as soon as markets reopened following US and Israeli strikes on Iran over the weekend. On Thursday morning, European equities gained and US stock futures were little changed after a report that Iran was ready to relinquish its uranium stockpiles.

“When you add that news flow to a market which had clearly got somewhat over-excitable in terms of the de-risking and de-leveraging that we saw on Tuesday, you have a fairly strong mix to drive a notable reversal across the board,” Michael Brown, senior research strategist at Pepperstone Ltd, wrote in a note regarding broader macro moves on Thursday.

“In fact, when sentiment had swung to such a bearish extreme, it doesn’t tend to need an especially notable or concrete catalyst to decisively turn things around,” he added.

Bitcoin has tumbled some 40% since its peak of over $126,000 in early October, buffeted by geopolitical uncertainty and a lack of clarity on US plans for new crypto legislation. More than $1.8 trillion has been wiped off the total market value of all cryptocurrencies in circulation since then, according to data from CoinGecko.

Still, there seem to be some bright spots for the asset class. After months of outflows, exchange-traded funds tracking Bitcoin in the US have recorded more than $1.1 billion in inflows so far in March, including $462 million on Wednesday, according to data compiled by Bloomberg. Flows into or out of those products are seen as a key barometer of confidence in the market.

“Sentiment is turning bullish again in the crypto world,” said Caroline Mauron, co-founder of Orbit Markets.

In recent days, Bitcoin has outperformed gold, to which the digital asset is often compared but seldom resembles. Since Friday, the day before the strikes, gold has fallen nearly 2%, while Bitcoin is up more than 10% in the same period. Until this week, the trend in recent months had largely been the opposite, as bullion repeatedly hit record prices while Bitcoin tumbled.

Outside of Bitcoin, other digital assets have shown “relative resilience” when considering the geopolitical turmoil, according to crypto analyst Sylvain Olive. A measure called Total 3, which represents the total market value of all altcoins excluding Ether, has increased by roughly 12% since the beginning of February, Olive wrote in a note for CryptoQuant on Thursday.

“This development remains notable given the still fragile global environment,” Olive wrote. “In such uncertain conditions, it becomes essential to carefully select positions, relying on market signals that are beginning to emerge.”

--With assistance from Anna Irrera.

(Recasts throughout to update prices and context.)

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