Impact of Iran-Israel Tension on Cryptocurrencies: A Quick and Clear Analysis
1. Introduction: The Geopolitical Landscape and the Crypto Market
The escalation of tensions between Iran and Israel represents a significant focus of geopolitical instability in the Middle East. This conflict, characterized by direct and indirect attacks, including cyberattacks, creates an uncertain environment that naturally leads investors to reevaluate their positions in various assets. The Middle East region is crucial for global markets, especially due to its importance in oil production and transportation.
This report aims to provide a clear and concise analysis of how the war between Iran and Israel impacts the cryptocurrency market. The analysis examines short-term reactions, the debate over the role of cryptocurrencies as a "safe haven" in times of crisis, and the influence of macroeconomic and historical factors. The goal is to demystify the relationship between geopolitics and crypto for the pragmatic investor, offering a deep understanding of market dynamics.
2. Immediate Reaction: Volatility and Quick Recovery
The initial market reaction of cryptocurrencies to events escalating the Iran-Israel conflict tends to be volatility and often a short-term price drop. Investors, during times of uncertainty, tend to offload assets considered risky, and cryptocurrencies, despite their decentralized nature, are still widely perceived as such by a segment of the market.
Price Fluctuations and Recovery Patterns
Recent observations of the Iran-Israel conflict illustrate this dynamic. In June 2025, following Israeli missile attacks on Iran, the cryptocurrency market recorded a loss of approximately $1 billion, with Bitcoin temporarily dropping to the $102-$104 thousand range. Bitcoin reached its monthly low of $103,940, also influenced by the U.S. Federal Reserve's decision to maintain interest rates. Similarly, in April 2024, the Iranian attack on Israel led to a 7.7% drop in Bitcoin, which fell to $61,593, while other cryptocurrencies lost up to 19% of their value in a week.
Despite these initial declines, the price of Bitcoin demonstrated a remarkable recovery capacity. After the bombings in June 2025, the asset regained much of its value. Analysts noted that Bitcoin did not seem "concerned" with the conflict between Israel and Iran at the time. Similarly, after the attacks in April 2024, the market began to recover the following morning, with Bitcoin rising to $64.6 thousand. Even in the context of the Israel-Gaza War, which began in October 2023, Bitcoin remained relatively unchanged and, 50 days after the initial attacks, was performing well above where it started, demonstrating resilience.
This market dynamic manifests as a "V-shaped recovery" pattern, where an initial sharp decline is followed by a quick recovery. Although there is an initial panic reaction and price drops, recovery tends to be swift. This suggests that the immediate impact is not long-lasting in the very short term. For the investor, this may indicate that initial panic tends to be an exaggerated reaction and that a patient stance may be rewarded. The growing maturity of the cryptocurrency market, with greater institutional participation, may contribute to this resilience, as there are more long-term investors who may view these declines as buying opportunities.
The Role of Liquidations
Massive liquidations of margin positions are a factor that amplifies initial declines. In June 2025, liquidations on cryptocurrency exchanges exceeded $1 billion in 24 hours, affecting about 250,000 traders who bet on the rise of BTC and ETH. This means that the structure of the cryptocurrency derivatives market can intensify initial volatility during geopolitical shocks, turning smaller sales into sharper declines due to margin calls. For an investor, understanding that part of the decline is driven by excessive leverage, and not just by a fundamental change in value, is crucial. This understanding can influence risk management strategies and the recognition that the market may be more prone to "flash crashes" in times of high tension.
Table 1 below provides a consolidated view of Bitcoin's reactions to specific events of the Iran-Israel conflict and other recent conflicts, visualizing the trend of initial volatility followed by recovery.
Table 1: Key Geopolitical Events and Immediate Reaction of Bitcoin
Event Date
Description of the Geopolitical Event
Immediate Reaction of Bitcoin
Time to Recovery (if applicable)
Source
June 2025
Israel-Iran missile attacks
Drop to $102-$104 thousand (loss of $1 billion in the market)
Largely recovered
1
April 2024
Iran Attack on Israel
Drop of 7.7% (to $61,593)
Recovery the following morning
1
October 2023
Israel-Gaza War
Remained relatively unchanged
Performance well above the beginning in 50 days
5
Feb. 2022
Russia's invasion of Ukraine
Increase of 16% in 5 days
Maintained resilience
5
March 2020
Beginning of the COVID-19 Pandemic
Drop of 41% in 7 days
Quick recovery
9
3. The "Digital Safe Haven" Debate: Crypto in Times of Crisis
The nature of cryptocurrencies in conflict scenarios is a topic of intense debate among analysts and academics. Some argue that they function as "safe havens" due to their decentralization and borderless nature, while others view them as risk assets that suffer in times of uncertainty.
Arguments for "Safe Haven" or Resilience
An academic study found a negative correlation between geopolitical risks and cryptocurrency volatility, suggesting that as tensions rise, crypto markets tend to stabilize, indicating their potential as a "safe haven". The same study points out that "green" cryptocurrencies are more resilient to geopolitical shocks. Another analysis of the Russia-Ukraine War established a significant positive relationship between the conflict and cryptocurrency returns, underscoring their resilience. Bitcoin, for instance, saw a 16% increase in five days following the Russian invasion of Ukraine in February 2022.
Bitcoin's stability amid tensions between Israel and Iran has been seen as a positive sign, suggesting its growing acceptance as a store of value, akin to gold. Its decentralized nature means it is not subject to the same geopolitical risks as traditional financial assets. Industry figures, such as Tether CEO Paolo Ardoino, compare Bitcoin to traditional "safe haven" assets like gold and land, highlighting its portability and borderless nature.
Arguments for "Risk Asset" or Vulnerability
Despite the "digital gold" narrative, Bitcoin often behaves as a risk asset in the short term, leading to price declines during crises. An academic study concluded that cryptocurrencies (Bitcoin, Ethereum, and Litecoin) have "relatively weaker" hedge functions compared to traditional assets like gold, the dollar, and oil, especially under extreme market conditions where the correlation between geopolitical risk and asset prices is more pronounced. Binance analysts observe that investors tend to avoid risk assets like Bitcoin and altcoins, reallocating capital to safer assets like gold or government bonds.
Comparison with Traditional Assets and the Evolution of the Narrative
In times of instability, investors often transfer funds to gold, the U.S. dollar, or other traditional "safe havens". Gold is widely recognized as a traditional hedge against inflation and currency devaluation. However, its portability and accessibility may be limited compared to Bitcoin.
The main observation is that Bitcoin is neither purely a "safe haven" nor purely a "risk asset"; its function is contextual and evolutionary. In the very short term, it reacts as a risk asset with declines, but demonstrates resilience and the ability to recover quickly. The "safe haven" narrative seems to apply more to the medium/long term or to specific use cases, such as evading sanctions or donations in conflict zones, or for investors seeking a borderless asset. The view of "tech stock" presented by Ray Youssef, CEO of NoOnes, suggesting that Bitcoin is behaving more like a "technology stock" with its strong correlation to the Nasdaq 100, indicates an increasing correlation with traditional stock markets, making it susceptible to macroeconomic factors affecting the technology sector.
The existence of contradictory academic studies and expert opinions demonstrates that there is no simple, one-size-fits-all answer to Bitcoin's role in crises. The investor needs to understand this complexity and the nuances of timing and context. Bitcoin is a relatively new asset, and its role in crises is still being defined and observed, with market maturity potentially altering its behavior over time.
During periods of tension, a "flight to quality" movement is observed within the crypto market itself, with capital flowing from riskier altcoins to Bitcoin, increasing its dominance. This suggests that even if the crypto market as a whole suffers, Bitcoin is perceived as the safest asset within the cryptocurrency ecosystem.
relative. The increase in Bitcoin's dominance indicates that investors see Bitcoin as a relative refuge within its asset class, even though it is not an absolute refuge compared to gold or bonds.
4. Influencing Macroeconomic and Regional Factors
The impact of Iran-Israel tensions on cryptocurrencies is not limited to direct market reactions. Macroeconomic factors and specific regional events play a crucial role in shaping the crypto market's response.
Impact on Oil Prices and Inflationary Consequences
One of the most significant channels of indirect impact from the Iran-Israel conflict on cryptocurrencies is through the oil market. Iran is a major oil producer, and the Strait of Hormuz, a crucial waterway near the Iranian coast, handles about 20% of global oil exports. The escalation of violence may disrupt the flow of oil, leading to a spike in prices. For example, following Israeli attacks on Iranian targets in June 2025, Brent oil prices rose by 5.5% to $75 per barrel. If disruptions persist, prices could reach $120 per barrel or more, representing a significant economic shock.
Higher oil prices fuel global inflation. Inflation, in turn, pressures central banks, such as the U.S. Federal Reserve, to tighten monetary policy, for example, by raising interest rates. Historically, more restrictive monetary policies make risk assets, including cryptocurrencies, less attractive compared to safer, guaranteed-return investments, negatively impacting the crypto market.
The main implication is that the most significant and lasting impact of the Iran-Israel conflict on cryptocurrencies is not direct but rather indirect, through its influence on global oil prices and, consequently, on central bank monetary policy. The conflict acts as a catalyst for inflationary shocks that, in turn, dictate the stance of central banks, which has a cascading effect on risk assets like cryptocurrencies. For the investor, it is crucial to understand that the impact is not limited to the immediate reaction but extends through a chain of macroeconomic events. If war drives up oil prices, this leads to inflation, which leads to higher interest rates, which disfavors crypto. This demonstrates the interconnectedness of the crypto market with the traditional global economy, demystifying the idea that crypto operates in a vacuum and highlighting the importance of monitoring traditional economic indicators.
Influence of Monetary Policies and Institutional Involvement
Government fiscal policy and central bank monetary policy decisions (such as stimuli or interest rate hikes) have proven to be "much more impactful" on Bitcoin's price than direct war events. For instance, government stimulus during COVID-19 boosted Bitcoin, while interest rate hikes in 2022 had the opposite effect, causing a decline of over 65% in Bitcoin's price. The U.S. Federal Reserve's decision to maintain interest rates, combined with geopolitical tensions, contributed to Bitcoin's consolidation and risk-averse stance in the market.
The growing maturity of the crypto market, with greater institutional participation, may provide underlying support, making Bitcoin more stable than in previous cycles, as large players may be positioned defensively.
Specific Events: Nobitex Hack and Use of Crypto for Sanction Evasion
The conflict also manifests in the digital realm. Hackers with possible links to Israel (the group "Gonjeshke Darande" or "Predatory Sparrow") drained over $90 million from Nobitex, Iran's largest cryptocurrency exchange, in a politically motivated attack. The stolen funds were transferred to addresses that "burned" the funds, indicating a political message rather than a financial motive.
This incident is significant given the modest size of Iran's crypto market and allegations that Nobitex helped the Iranian government circumvent Western sanctions and transfer money to militant groups, including Hamas and the Houthis. In response, Iran's central bank imposed a "curfew" on domestic cryptocurrency exchanges, limiting operations to daytime hours to improve monitoring and mitigate capital flight during hostilities.
domestic cryptocurrency exchanges, limiting operations to daytime hours to improve monitoring and limit capital flight during hostilities. The use of cryptocurrencies by Iran to circumvent sanctions may increase their demand amid the conflict, but attacks on infrastructure (such as the Nobitex hack) may limit mining and transactions, creating operational risks.
The Nobitex hack and subsequent regulatory restrictions in Iran demonstrate that cryptocurrencies are not only an investment asset but also a tool and target in modern hybrid warfare, including cyberattacks and sanction evasion. This elevates the profile of cryptocurrencies beyond speculative investment and positions them as strategic elements in geopolitical conflicts, with implications for security and regulation. Information about the hack and the use of crypto for sanction evasion reveals a strategic dimension of cryptocurrencies in conflicts. This shows that the conflict not only affects price but also the utility and regulation of cryptocurrencies in certain regions, adding a layer of complexity for investors operating globally or in emerging markets, highlighting the need to consider cybersecurity and compliance risks.
Table 2 below consolidates the complex indirect impact channels, making them more understandable for the investor. It reinforces the idea that the conflict does not act in isolation but through an interconnected network of factors, and that global economic policy is a more powerful driver than direct geopolitical events for the crypto market.
Table 2: Macroeconomic Factors and Their Impacts on Crypto
Macroeconomic Factor
Impact Mechanism (Causal Chain)
Effect on the Crypto Market
Relevant Snippets
Oil Price
Conflict -> Supply Disruption -> Price Increase -> Global Inflation
Negative pressure, as inflation leads to tighter monetary policy
1
Interest Rates
High inflation -> Central banks raise rates -> Higher cost of capital
Discourages risk assets like cryptocurrencies
1
Fiscal Policy
Government stimuli (e.g., COVID-19)
Positive momentum for Bitcoin
9
Cyberattacks
Digital conflict -> Attacks on exchanges (e.g., Nobitex)
Loss of funds, operational risk, regulatory restrictions
11
Sanction Evasion
Countries under sanctions use crypto to circumvent restrictions
Increased demand in specific regions, but with regulatory and infrastructure risks
1
5. Historical Perspective and Long-term Resilience
Recent history of Bitcoin and other cryptocurrencies in the face of major global crises demonstrates a pattern of resilience and recovery, suggesting that geopolitical shocks, while causing volatility, do not necessarily result in sustained declines.
Reaction to Past Conflicts
The Russia-Ukraine War, which began in February 2022, is a notable example. After the large-scale invasion, the price of Bitcoin rose 16% in just five days, defying the trend of other financial markets. Exchanges in Russia and Ukraine recorded crypto trading at extremely high premiums as people sought to circumvent exchange controls. Ukraine also received more than $70 million in cryptocurrency donations, demonstrating the practical use of technology in crises. Although Bitcoin fell later that year, this decline was attributed to the collapse of the Terra stablecoin ecosystem and other market events, rather than directly to the war, reinforcing the primacy of macro/systemic factors. An academic study confirmed a significant positive relationship between war and cryptocurrency returns, indicating resilience.
During the COVID-19 pandemic, in March 2020, Bitcoin experienced a sharp decline of nearly 41% in seven days, reacting to global economic uncertainty. However, it recovered quickly, driven by unprecedented government stimulus programs, demonstrating how fiscal policy can reverse the negative impact of a shock.
Rapid Recovery Capacity
Historically, the crypto market has demonstrated the ability to recover quickly after geopolitical shocks, as long as the escalation of conflict subsides or macroeconomic factors stabilize. For example, following the attacks in April 2024, the market began to recover the next morning. Historical data from 2010 to 2020 shows that after the top 20 geopolitical risk events, Bitcoin had an average price increase of 64.6% in 50 days, with a median gain of 17.3%. This suggests that current declines may be temporary market reactions, with historical precedents pointing to substantial gains in the following weeks. The CEO of Blockstream, Adam Back, reinforced this trend, showing a 20% gain in Bitcoin following the U.S.-Iran escalation in January 2020, frequently outperforming gold and the S&P 500.
Historical evidence suggests a recurring pattern where geopolitical shocks, although causing initial declines, are often followed by robust recoveries and even significant gains in the medium term (e.g., 50 days). This transforms short-term risk perception into a potential buying opportunity for long-term investors, who may see these declines as strategic entry points. Analyzing past events is crucial to provide a long-term perspective for the investor. Observing historical recovery patterns indicates that declines can be buying opportunities. This is valuable for the pragmatic investor who seeks not only to understand the impact but also how to react strategically.
The most significant and sustained declines in Bitcoin have often been driven by broader macroeconomic factors (e.g., interest rate hikes, collapse of ecosystems like Terra) rather than directly by geopolitical conflicts. This reinforces the argument that monetary policies and global economic health carry more weight in Bitcoin's long-term performance than isolated geopolitical events, which tend to cause only short-lived shocks. When comparing Ukraine's post-war recovery to Bitcoin's subsequent decline, attributed to the Terra collapse, it becomes clear that not all major declines are caused by conflicts. This refines the understanding of causality: conflicts cause volatility and initial declines, but systemic or macroeconomic factors are more likely to cause sustained declines.
Table 3 below consolidates empirical evidence of Bitcoin's resilience and recovery after geopolitical shocks, providing concrete data supporting the long-term perspective and the idea that such events can be opportunities.
Table 3: Historical Performance of Bitcoin Post-Geopolitical Events
Geopolitical Event
Event Date
Immediate Reaction of Bitcoin
Performance (50 days after)
Average/Median Gain Post-Event
Source
Israel-Gaza War
October 2023
Remained relatively unchanged
Performed well above the beginning
N/A (immediate resilience)
5
Russia-Ukraine War
Feb. 2022
Increase of 16% in 5 days
Resilience and recovery
N/A (immediate resilience)
5
COVID-19 Pandemic
March 2020
Drop of 41% in 7 days
Quick recovery
N/A (quick recovery)
9
Top 20 Geopolitical Events (since 2010)
Various
Initial declines
Average increase of 64.6%
64.6% (average), 17.3% (median)
7
U.S.-Iran Escalation
January 2020
N/A
Increase of 20%
20%
7
6. Conclusion: Key Points and Future Outlook
The tension between Iran and Israel, like other geopolitical conflicts, triggers an immediate reaction of volatility and price declines in the cryptocurrency market, especially in Bitcoin. However, this volatility is often short-lived, followed by a relatively quick recovery, characterizing a "V-shaped recovery" pattern.
The narrative of Bitcoin as a "digital safe haven" is complex and not unanimous. While some studies and market observations point to its resilience and potential for stabilization, others classify it as a risk asset in the short term, with weaker hedge functions compared to traditional assets like gold and the dollar. The truth lies in a nuance: Bitcoin may be a "relative safe haven" within the crypto ecosystem, attracting capital from altcoins during uncertainty and demonstrating resilience in the medium term, but it does not offer the same stability as gold or government bonds in immediate panic.
Considerations on the Growing Maturity of the Crypto Market
The cryptocurrency market is maturing, with greater institutional participation and a more cautious investor stance, reflected in a "wait-and-see" mode and demand for protection against downturns. This may contribute to less extreme volatility and a more robust recovery capacity compared to previous cycles, indicating greater resilience to external shocks. Macroeconomic factors, such as inflation driven by oil prices and central bank monetary policies, exert a deeper and more lasting influence on the crypto market than isolated direct geopolitical events. The interconnectedness of crypto with the traditional global economy is increasingly evident. In addition to price impacts, the conflict highlights the role of cryptocurrencies in hybrid war scenarios, such as cyberattack targets (Nobitex hack) and tools for sanction evasion, which may lead to new regulations and operational challenges in affected regions.
The "New Normal" for Crypto in Crises and Implications for Pragmatic Investors
The combination of initial volatility, quick recovery, dominant macroeconomic influence, and the role of cryptocurrencies in hybrid wars (cyberattacks, sanction evasion) defines a "new normal" for crypto market behavior in geopolitical crises. It is not a simple correlation, but a complex interaction of factors, where the direct impact is often overshadowed by macroeconomic consequences and the strategic use of technology. This synthesis of contradictory observations and complex interactions provides a mental framework for the investor, helping to contextualize crypto market behavior in a geopolitically volatile world.
For the investor, the message is clear: prepare for initial volatility, but watch the macroeconomic fundamentals and Bitcoin's historical recovery capacity. Portfolio diversification, attention to global monetary policies, and a long-term perspective remain prudent strategies. Understanding the role of cryptocurrencies in sanction contexts and cybersecurity also becomes relevant for assessing risks and opportunities in specific markets.