The war between Israel and Iran, like any major geopolitical conflict, can significantly impact the cryptocurrency market, causing both short-term and long-term effects. Key factors and their potential impact on the crypto market include:
1. Short-term volatility and price decline
Reaction to uncertainty: Geopolitical conflicts, such as the escalation between Israel and Iran, often cause panic in financial markets, including cryptocurrencies. Investors tend to avoid risk assets like Bitcoin and altcoins, reallocating capital to safer assets such as gold or government bonds. This can lead to sharp declines in cryptocurrency prices. For instance, in June 2025, following Israeli missile strikes on Iran, the cryptocurrency market lost about $1 billion, and Bitcoin temporarily fell to $102–104 thousand.
Liquidations: Mass liquidations of margin positions exacerbate the decline. According to Coinglass, in the 24 hours following the escalation of the conflict in June 2025, liquidations on cryptocurrency exchanges exceeded $1 billion, affecting around 250,000 traders who were betting on the rise of BTC and ETH.
Example of past events: In April 2024, Iran's attack on Israel led to a 7.7% drop in Bitcoin (to $61,593), while other cryptocurrencies lost up to 19% of their value within a week.
2. Impact through the oil market
Rising oil prices: The conflict between Israel and Iran may disrupt oil supplies, especially if Iran closes the Strait of Hormuz, through which about 20% of the world's oil exports pass. In June 2025, Brent oil prices rose by 5.5% to $75 per barrel following Israel's strike on the Iranian gas field South Pars. This may increase inflation, negatively impacting risk assets, including cryptocurrencies.
Macroeconomic pressure: Rising energy prices may prompt central banks, such as the US Fed, to tighten monetary policy (e.g., raising rates), which traditionally negatively affects the crypto market as investors lose interest in high-risk assets.
3. Increased demand for safe assets
In times of instability, investors often shift funds into gold, the US dollar, or other "safe havens." This is supported by comments from analysts such as Nick Rak from LVRG Research, who noted a shift of investors to more reliable assets during the escalation of the conflict. Bitcoin, despite its reputation as "digital gold," often behaves as a risk asset in the short term, leading to a decrease in its price during crises.
4. Long-term factors and recovery
Rapid recovery: Historically, the crypto market has shown the ability to rebound quickly after geopolitical shocks if the escalation of conflict subsides. For example, after the April 2024 strikes, the market began to recover by the morning of the following day, with Bitcoin rising to $64.6 thousand. Analysts from QCP Capital noted in June 2025 the "maturity and resilience" of Bitcoin despite the ongoing conflict.
Increased interest in decentralization: In the long term, conflicts may increase interest in decentralized assets such as cryptocurrencies due to distrust in traditional financial systems or fears of sanctions. For instance, Iran, under sanctions, may use cryptocurrencies to circumvent restrictions, potentially increasing demand.
5. Impact on specific regions
Israel and cryptocurrencies: Israel actively regulates the cryptocurrency market, and local banks such as "Leumi" are beginning to offer services for trading digital assets. The conflict may slow the development of this infrastructure due to increasing instability.
Iran and cryptocurrencies: Iran uses cryptocurrencies to circumvent sanctions, which may enhance their appeal amid the conflict. However, strikes on infrastructure, including energy, may limit mining and transaction capabilities.
6. Positive factors for the crypto market
ETF Approval: Approval of spot cryptocurrency ETFs in Hong Kong and the US (for Bitcoin and Ethereum) may mitigate the negative impact of the conflict by sustaining investor interest. Analyst Viktor Pershikov noted that such events contribute to structural changes in the market and can stimulate capital inflows even amid geopolitical instability.
Bullish cycle: Despite short-term declines, experts such as Ryan Macmillan from Merkle Tree Capital point to the likelihood of a continued bullish trend if the conflict does not escalate into a full-scale war.
Summary
The war between Israel and Iran is likely to continue causing short-term volatility in the crypto market, with declines in Bitcoin and altcoin prices due to investors fleeing to safe assets and rising oil prices. However, in the event of de-escalation, the market could recover quickly, as seen in the past. Long-term prospects depend on macroeconomic factors (Fed policy, inflation) and regional consequences (for example, the closure of the Strait of Hormuz). Investors should monitor the developments of the conflict and news on oil supplies to forecast further market dynamics.