How a Conflict Between Iran, the US, and Israel Could Impact Bitcoin

Metaverse Planet June 23, 2025Last Updated: June 23, 2025

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Global markets are currently facing escalating geopolitical risks, particularly in the Middle East. Tensions between Israel and Iran have reached an alarming level, with concerns rising over the direct involvement of the United States (US) in attacks targeting Iranian nuclear facilities. This situation has created a global state of alarm, triggering intense diplomatic efforts worldwide. In this uncertain environment, examining how decentralized assets like Bitcoin are positioned as an alternative to traditional financial systems and how they respond to such crises has become a critical area of study for investors.

This analysis aims to comprehensively evaluate the potential impacts of escalating tensions between Iran, the US, and Israel on the Bitcoin market, considering both technical and fundamental data. Building on lessons learned from past geopolitical events, we will meticulously examine current market dynamics and potential scenarios.

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1. Current State of Geopolitical Tensions and Their Global Market Impacts

Recent attacks by Israel on targets in Iran, particularly nuclear facilities, and concerns about US participation in these strikes, have brought regional tensions to a peak. Stern warnings from Iran to the US further underscore the gravity of the situation. This multi-dimensional tension has elicited diverse international responses. For instance, Australia has supported the US attacks, while Spain has demanded sanctions on Israel, and Hungarian Prime Minister Orban has called on the European Union (EU) to reverse the ban on Russian energy. These international reactions clearly demonstrate the broad global political and economic repercussions of the conflict, extending beyond its military dimension.

Such tensions cause markets to react sensitively not only to direct conflict news but also to shifts in international alliances and trade policies. Developments like the potential effects of trade wars on crypto markets or discussions on trade relations at the G7 summit indicate that geopolitical tensions have widespread economic consequences that could play a significant role in Bitcoin pricing.

The escalating tensions in the Middle East significantly increase global economic risks, primarily concerning energy supply. The Strait of Hormuz, in particular, is a critical waterway through which approximately one-third of the world’s seaborne crude oil and 20% of liquefied natural gas (LNG) trade passes. Following US airstrikes on Iran, concerns about a potential closure of the Strait of Hormuz have intensified. Statements from Ismail Kowsari, a member of the Iranian Parliament’s National Security Commission, emphasize the seriousness of this possibility.

Oil prices have continued to rise amidst war tensions; Brent crude opened the week up 1.2%, and West Texas Intermediate (WTI) crude oil rose 1.3%, extending gains for a fourth consecutive trading day. However, prices have also seen declines amid ceasefire efforts. European Central Bank Governing Council member Nagel warned that a prolonged and severe conflict could lead to significant increases in oil prices. JPMorgan models are analyzing risks that could arise if oil prices climb from $75 to $100. A potential closure of the Strait of Hormuz would not only impact oil prices but could also trigger global inflation and recession risk, leading to deep economic problems similar to the 1970s oil crisis. This situation would test Bitcoin’s positioning as an “inflation hedge” while also potentially driving its perception as an alternative during traditional market collapses.

Traditional financial markets have shown a clear reaction following developments in the Middle East. US and European index futures started the week negatively. The Nasdaq and S&P 500 indices saw declines, while the Dow Jones index recorded a slight increase. Shares of defense and energy companies rose (e.g., Lockheed Martin 3.7%, Exxon 2.2%), while airline shares fell (e.g., American Airlines nearly 5%). Gold prices rose with geopolitical tension but relinquished gains due to messages of diplomatic resolution. The US 10-year Treasury yield has been on an upward trend. The US Dollar Index has also gained value against major currencies. Analysts stated that easing inflation-recession concerns in the US, driven by optimism regarding tariff negotiations, could intensify again due to geopolitical tensions in the Middle East. Barclays warned that while the current crisis might present a good buying opportunity in the medium term, US involvement in the conflict could bring a “reality check” to market calm. This “risk-off” reaction in traditional markets leads to Bitcoin being perceived as a risky asset in the short term, triggering price declines. However, rises in the energy and defense sectors indicate that capital is shifting towards areas that could benefit from the crisis.

2. Bitcoin’s Safe-Haven Asset Debate and Historical Performance

Bitcoin’s decentralized structure, independence from government intervention, and limited supply strengthen arguments positioning it as a “safe haven” or “inflation hedge” against traditional financial systems. BlackRock CEO Larry Fink’s statement, “Bitcoin is bigger than any government,” supports this view. However, Bitcoin’s history of high volatility and increasing correlation with traditional risk assets, especially after institutional adoption, calls this “safe haven” narrative into question. Some research indicates that Bitcoin showed weak hedging properties before COVID-19 and weak safe-haven properties during the pandemic.

Bitcoin’s safe-haven status is a dynamic concept that varies based on market conditions and the nature of the crisis. It tends to exhibit stronger safe-haven characteristics in situations where the financial system is destabilized, such as during banking crises, or in countries experiencing currency devaluation. Conversely, in global geopolitical conflicts, it tends to behave like a risky asset in the short term. This suggests that Bitcoin’s narrative as an “alternative to the system” emerges more powerfully when the traditional financial system is directly weakened. On the other hand, in global geopolitical conflicts, especially those involving major economies like the US, Bitcoin generally declines along with traditional risk assets. This indicates that with increasing institutional adoption, Bitcoin has become more integrated into traditional markets and is more affected by global risk appetite.

Bitcoin’s price movements during past geopolitical events highlight the asset’s complex reactions:

Israel-Iran Tensions (June 2025, April 2024): Immediately after Israel’s attacks on Iran in June 2025, Bitcoin experienced a brief dip, though the price largely recovered. Analysts noted that Bitcoin was “not yet” concerned about this conflict. Institutional investors like MicroStrategy bought 10,001 BTC worth $1 billion during this period. In April 2024, following Israel’s attack on the Iranian embassy and Iran’s retaliation, Bitcoin price experienced short-term declines (over 8% loss) but continued its ascent as markets adapted to the new normal.
Israel-Gaza War (October 2023): After the Israel-Gaza War began on October 7, 2023, Bitcoin was relatively unaffected and performed significantly above its starting level 50 days later. This even triggered a rally of 70% that lasted for months.
Russia-Ukraine War (2022): Following Russia’s invasion of Ukraine in February 2022, Bitcoin price increased by 16% within five days. Crypto donations to Ukraine exceeded $100 million. Subsequent declines were attributed to internal market factors like the collapse of the Terra stablecoin ecosystem, not war concerns.
Global Economic Crises (2008 Banking Crisis, COVID-19 Pandemic): Bitcoin emerged after the 2008 financial crisis, designed as an “antidote” to banking system instability. After the banking crisis in 2023 (Silicon Valley Bank, Credit Suisse), Bitcoin surged from $20,000 to $28,000 within a few days. Bitcoin and gold reacted similarly during this crisis. During the COVID-19 pandemic, Bitcoin price increased by over 1200% (since December 2019), as people sought new investment opportunities to reduce market volatility risk. Bitcoin rose 131% from its lows after the 2020 pandemic, while gold gained only 6%.
9/11 Terrorist Attacks (Related Research): Terrorist events and atrocities may explain Bitcoin’s price. Research indicates that the scale of atrocity (death toll) had a stronger effect than the frequency of terrorist events. However, Bitcoin’s impact on terrorist attacks is negligible.

The examples above show that Bitcoin generally exhibits a short-term decline (volatility) in response to geopolitical events, followed by a rapid recovery and often a long-term upward trend. This indicates that Bitcoin’s intrinsic market dynamics and institutional interest create resilience against external shocks. Bitcoin’s performance in past crises reflects the complex interplay between its potential as “digital gold” and its tendency to behave as a “high-risk technology asset.” With increasing institutional participation, Bitcoin’s correlation with traditional markets has strengthened, making it more susceptible during short-term risk-off periods. However, as crises prolong and confidence in traditional systems wanes, Bitcoin’s appeal as an alternative store of value can increase. A significant factor behind the rapid recoveries observed in past events is that institutional investors like MicroStrategy and BlackRock ETFs have viewed these dips as buying opportunities.

3. Technical and Fundamental Impacts of a Potential War on Bitcoin

A potential war between Iran, the US, and Israel is expected to have various technical and fundamental impacts on the Bitcoin market. In the short term, a significant increase in market volatility and price declines could be observed. Analysts expect a 10-20% drop in Bitcoin price within a few days if the US is directly involved in the war; in extreme scenarios, a 50% drop has even been predicted. During such periods of tension, liquidations exceeding billions of dollars have occurred in the crypto market. Especially long positions suffer significant losses in the face of rapid price pullbacks. As market capitalization decreases, trading volume increases with volatility. This also leads to marked declines in indicators like the “fear and greed index,” reflecting increased fear and uncertainty among investors.

Investor behavior in such crises is shaped by a “flight to safety” tendency. Investors may shift to perceived safe havens like the US dollar, gold, or government bonds, which would weaken demand for cryptocurrencies. However, long-term oriented institutional investors and “whales” tend to view these dips as buying opportunities. MicroStrategy’s $1 billion Bitcoin purchase in June 2025 and record inflows into Bitcoin ETFs show that institutional interest continues even during price declines. This provides support to the market and strengthens recovery potential. This contrast between panic selling by individual investors and the institutional “buy the dip” strategy makes market dynamics more complex.

A prolonged potential war could lead to significant increases in oil prices and rising global inflation. This could force central banks, particularly the US Federal Reserve (Fed), to delay interest rate cuts or tighten monetary policy. Such tightening policies are generally considered a negative signal for risky assets like Bitcoin. However, prolonged and high inflation could revive Bitcoin’s “inflation hedge” narrative. If the Fed is forced to cut interest rates to mitigate the economic effects of the war, this scenario could create potential for a rally towards the $120,000 level for Bitcoin.

Geopolitical tensions can also reshape the regulatory environment and adoption models of cryptocurrencies. On one hand, cryptocurrency adoption could accelerate in economically distressed regions where traditional financial systems are disrupted or capital controls are imposed. Crypto donations to Ukraine or the shift to Bitcoin in countries experiencing local currency devaluation support this. On the other hand, this situation could lead to increased global regulatory scrutiny due to concerns about money laundering and illicit financing. International organizations like the Financial Stability Board (FSB) and the Financial Action Task Force (FATF) continue to issue warnings about the risks of crypto assets to the financial system. The adoption of regulations like MiCA in the EU is an indication of global efforts in this area.

From a technical analysis perspective, in a potential war scenario, Bitcoin’s critical support and resistance levels will be closely monitored. Movements such as Bitcoin falling to $103,556 and dropping below $100,000 during the recent Israel-Iran conflict indicate that significant psychological and technical support levels are being tested. The $99,500 – $100,000 range, in particular, stands out as a crucial support zone. Some analyses suggest that the $97,600 level could be strong support. Technical indicators like the Relative Strength Index (RSI) falling to oversold levels (RSI dropped to 25.51 during the June 2025 decline) could signal a potential bottom. However, remaining below the 20-day simple moving average could also indicate continued downward pressure. In the long term, there’s also potential for a rally towards $110,000-$115,000 or $120,000 if the Fed opts for interest rate cuts.

Conclusion and Assessment

Escalating geopolitical tensions between Iran, the US, and Israel are creating deep and multifaceted impacts on global markets. These tensions are driving up oil prices due to energy supply concerns, leading to a “risk-off” sentiment in traditional financial markets, and increasing global inflation and recession risks. In this complex environment, Bitcoin’s role exhibits a dual nature as both a “safe haven” and a “risky asset.”

In situations where the traditional financial system is weakened, such as past banking crises or local currency devaluations, Bitcoin has stood out as an alternative and gained value due to its decentralized structure and limited supply. However, in global geopolitical conflicts, especially in scenarios with direct involvement of major economies, Bitcoin tends to decline in the short term along with traditional risky assets. This indicates that with increasing institutional adoption, Bitcoin has become more integrated into traditional markets and is more affected by global risk appetite.

Nevertheless, Bitcoin’s tendency to show a rapid recovery and long-term resilience after short-term declines during past geopolitical events is noteworthy. Institutional investors viewing these dips as buying opportunities provides significant support to the market. In a potential war scenario, while sharp price declines and high volatility are expected in the short term, factors like rising inflation expectations or central banks shifting towards loose monetary policies could strengthen Bitcoin’s “inflation hedge” narrative and increase its value in the medium to long term.

In conclusion, while a potential war between Iran, the US, and Israel could create uncertainty and downward pressure on the Bitcoin market in the short term, it also holds the potential to increase Bitcoin’s appeal as an alternative store of value and an inflation hedge in the medium and long term. For investors, closely monitoring market dynamics, macroeconomic developments, and technical levels during this period is critical for making informed decisions.