In June 2025, the Middle East powder keg was reignited, and the conflict between Israel and Iran entered a new round of intense confrontation. This conflict is not only a continuation of the long-standing hostility between the two sides but has also drawn global attention due to its involvement in nuclear program intelligence warfare and direct military strikes.
The background of the conflict: From intelligence warfare to escalation of airstrikes
On June 7, Iran publicly announced the acquisition of 'thousands' of confidential documents regarding Israel's nuclear program, claiming it was a 'tit-for-tat' action against the Mossad's theft of Iranian nuclear files in 2018. Iranian state media reported that this intelligence operation took months, involving documents related to Israel's nuclear facilities and strategic plans, aimed at deterring Israel and increasing leverage in nuclear negotiations.
Israel responded quickly. On June 12, rumors began circulating on platform X that Israel might take military action against Iran, leading to a surge in market tension. In the early hours of June 13, the Israeli Air Force launched a large-scale airstrike against Iran, code-named undisclosed, targeting nuclear facilities, military bases, and missile production centers in Tehran and surrounding areas. According to Al Jazeera, explosions were heard over Tehran, and Israeli Defense Minister Katz subsequently declared a state of emergency nationwide, warning that Iran might launch retaliatory missile and drone attacks.
X users revealed that Israel may have 'decapitated' the chief of staff of the Iranian armed forces and senior officers of the Revolutionary Guards, leading to speculations of a power vacuum within Iran. Although Iranian officials have not yet confirmed high-level casualties, the Iranian Foreign Ministry spokesperson condemned Israel's 'aggressive actions' and vowed to take 'devastating retaliatory actions.' Iran's Supreme Leader Khamenei cautiously stated that the attack 'should not be exaggerated or downplayed,' seemingly leaving room for possible retaliatory actions.
The trigger for the conflict is not limited to intelligence warfare. The collapse of the Gaza ceasefire agreement since March 2025 has buried hidden dangers in the Middle East situation. Israel failed to fulfill its commitment to withdraw from Gaza as per the agreement and launched 'Operation Power and Sword' against Gaza on March 18, resulting in over 400 deaths and provoking strong condemnation from Iran. Additionally, the U.S. has resumed its 'maximum pressure' policy against Iran, attempting to reduce Iranian oil exports to 'zero,' further exacerbating Iran's confrontational sentiment.
Global financial markets: Risk-off sentiment intensifies, volatility increases
The escalation of the Israel-Iran conflict has had a significant impact on global financial markets. After the news of the airstrike on June 13, the market quickly entered risk-off mode. Gold prices surged in a short time, breaking through $3,400 per ounce. The oil market also experienced violent fluctuations, with the price of Brent crude oil nearing $90 per barrel due to the potential blockade risks in the Strait of Hormuz controlled by Iran.
If the conflict escalates further, oil prices may hit triple digits, posing a severe threat to the global supply chain.
In the stock market, major indices in Asia-Pacific and Europe generally fell after the opening on June 13. S&P 500 futures dropped by about 1.5%, with tech stocks particularly pressured due to supply chain concerns. In the Asian market, the Nikkei 225 index and Hang Seng index fell by 2% and 1.8%, respectively. Market analysts pointed out that the uncertainty in the Middle East situation may force investors to shift from high-risk assets to safe assets like government bonds, leading to a slight decline in the yield of 10-year U.S. Treasury bonds.
Cryptocurrency: Short-term plummet and long-term uncertainty
The cryptocurrency market reacted particularly violently to geopolitical risks. Following the announcement of the airstrike on June 13, Bitcoin (BTC) fell by 3.5% within 12 hours, dropping to around $103,000; Ethereum (ETH) suffered an even greater decline, exceeding 8%, hitting a low of $3,436.
X user @ordjingle humorously remarked that 'the Bitcoin wallet bulls were nearly wiped out,' reflecting market panic.
The reasons for this decline are mainly threefold: first, geopolitical conflicts typically increase the demand for safe-haven assets (such as gold and the U.S. dollar), diminishing the attractiveness of cryptocurrencies; second, Iran, as a country with active cryptocurrency trading, has seen its domestic market thrown into chaos due to the dual pressures of conflict and sanctions, with the Iranian Central Bank's suspension of rial payments to cryptocurrency exchanges in February already limiting 10 million users, and this conflict may further suppress local demand; finally, the uncertainty of the global macroeconomic environment compels investors to reduce their holdings in high-volatility assets, with the crypto market being the first to bear the brunt.
X user @NFTfafafa warns that if the conflict escalates into a full-scale war, the crypto market may face an 'unprecedented crash.'
Outlook: Pricing risk in uncertainty
Currently, the confrontation between Israel and Iran has entered an extremely dangerous 'action-retaliation' spiral. Iran's missile arsenal has the capability to strike across all of Israel, while Israel has military options to destroy Iran's nuclear program. Any miscalculation by either side could drag the entire Middle East into an unprecedented war.
For the global market, this means that the geopolitical risk premium will remain high for some time. Investors need to closely monitor the subsequent developments of the conflict, the trend of oil prices, and potential policy adjustments by major central banks in response to possible economic shocks.
In the current chaotic situation, whether in the traditional financial market or the crypto world, the core task is to reprice this new and already upgraded risk.
