How does war affect Bitcoin? An in-depth analysis of the price trajectory over five years
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On June 13, 2025, in the early morning, Israel launched 'Operation Lion's Rise', attacking multiple cities, military bases, and nuclear facilities in Iran. Recently, Iran's largest cryptocurrency trading platform, N,obi,tex, was hacked by Israeli hackers, resulting in losses of tens of millions of dollars in stablecoins. Bitcoin quietly fluctuated amid the smoke of war, rising to nearly $110,000 before declining again. Through major war conflicts between 2020 and 2025, we can observe Bitcoin's sensitive reaction to geopolitical events. This article will deeply analyze the impact of major war conflicts on Bitcoin's price trend over the past five years and the trajectory of the cryptocurrency market's recovery after wars.
A turning point in the Russian-Ukrainian conflict
The Russian-Ukrainian conflict fully erupted on February 24, 2022. The outside world anticipated that Russian funds would flow into cryptocurrencies like Bitcoin, causing Bitcoin's price to rise by 20%, briefly exceeding $45,000. At that moment, Russian oligarchs attempted to convert frozen assets through Bitcoin, seemingly confirming the 'crisis value' of cryptocurrencies.
However, in the long run, as the war drove European natural gas prices to historic levels and the Federal Reserve had to implement the most aggressive interest rate hikes in forty years, Bitcoin experienced a collapse of 65% in 2022. Although this decline cannot be entirely attributed to the war, the geopolitical uncertainty undoubtedly increased pessimism in the market.
Interestingly, the continuity of the war provided new narrative support for Bitcoin. The Ukrainian government raised millions of dollars in donations through cryptocurrencies, highlighting the unique value of digital currencies under limited traditional financial systems. At the same time, in the face of Western sanctions, Russia has also turned to cryptocurrencies to some extent as a tool to circumvent sanctions, further enhancing Bitcoin's status as an alternative financial tool.
It is worth noting that in 2014, Bitcoin entered a long-term bear market after Russia's invasion of Ukraine. However, by 2022, Bitcoin had evolved into a larger, stronger, and more accepted asset class among institutional investors.
Market Test for the Israeli War
On October 7, 2023, the Israeli-Gaza conflict broke out. On October 11, according to data from bit,sCr,un,ch, Bitcoin dropped below $27,000, marking its lowest level since September, as traders generally attributed this to the negative impact of the conflict in the Middle East on investor sentiment. During the Gaza conflict in 2023, the volume of USDT transfers increased by 440% weekly, as stablecoins became a new infrastructure.
Since the beginning of the conflict between Israel and Hamas, digital asset prices have not shown significant volatility. This relative stability reflects a decrease in the sensitivity of the cryptocurrency market to geopolitical events.
The Iranian-Israeli conflict
During the Iranian-Israeli conflict in April 2024, on the day of the missile attacks, Bitcoin's volatility was only ±3%, less than a third of the volatility during the Russian-Ukrainian war. The Blac,kRock ETF had a net inflow of $420 million in one day, forming a barrier to volatility. The daily trading volume of Spot ETF was 55%, with war sentiments being alleviated by the flow of institutional orders.
Data from bits,Crun,ch shows that even during major geopolitical events such as Israeli airstrikes on Iran, the Bitcoin market did not enter a state of panic. Although Bitcoin dropped by 4.5% to $104,343 and Ethereum fell by 8.2% to $2,552 in the first 24 hours of the war in June 2025, these declines were still relatively manageable considering the severity of the event, demonstrating strong resilience.
However, according to the Geopolitical Risk Index (GPR), we find that the index is currently trending upward, around 158. The last time it exceeded 150 was in early 2024. This index was built by Dario Caldara and Matteo Iacoviello. The GPR peaked before and after the World Wars, during the early stages of the Korean War, during the Cuban Missile Crisis, and after the 'September 11' event. As geopolitical risks rise, investment, stock prices, and employment rates decline. High geopolitical risks increase the likelihood of economic disasters and negative risks to the global economy.
The best window to observe the logic of capital
The moment of signing a ceasefire agreement is often the best window to observe the logic of capital. In November 2020, when the Nagorno-Karabakh war ended, Bitcoin almost doubled in the following 30 days. The main reason for igniting this regional conflict in a small Caucasian country for the cryptocurrency market is that the war did not change the flexible global policy, with the Federal Reserve's $120 billion monthly bond-buying program continuing to irrigate risk assets. In contrast, in March 2022, during the Russian-Ukrainian negotiations, the short hope for a ceasefire crashed due to the Federal Reserve's expectation of raising interest rates by 50 basis points, causing Bitcoin to drop by 12%.
On the day of the temporary ceasefire between Israel and Palestine in November 2023, $210 million was liquidated in the cryptocurrency derivatives market. The exchange rate premium between Bitcoin and the Egyptian pound in the OTC market fell from 8.2% to 2.1%, with demand gradually declining in war-torn areas. The narratives of ETF approval and the rating cycle soon overshadowed the war narrative. On January 15, 2025, Israel and Hamas agreed to a ceasefire proposal and a prisoner exchange. After that, Bitcoin sharply rose, surpassing $100,000 again before declining. The market performance during the conflict in the Middle East prompted a reconsideration of Bitcoin's characteristics as a safe asset - Bitcoin and Ethereum can no longer be considered safe assets in the gold market.
Entering the institutional era
The wartime value of digital assets has not disappeared but is being rebuilt in scenarios. The Ukrainian government received $127 million in cryptocurrency donations, representing 6.5% of its early international aid; underground networks in Gaza maintained communication networks through Bitcoin mining machines; Iranian oil traders used mixers to circumvent sanctions... these real applications in marginal areas form a parallel ecosystem to the dark web. While mainstream markets focus on ETF fund flows, the demand for cryptocurrencies in war-torn areas has become a new indicator for monitoring digital assets.
The current cryptocurrency market has formed a clear response mechanism to war: rising oil prices.
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