The rising tensions in the Middle East, with Iran on high alert following recent military strikes, have sent shockwaves through global financial markets. The crypto sector, often viewed as a volatile yet independent asset class, is no exception.

Historically, geopolitical crises trigger a “risk-off” sentiment where investors exit high-risk assets like cryptocurrencies and shift to safe havens such as gold and U.S. bonds. In the wake of the Iran-Israel conflict, Bitcoin and Ethereum have already seen sharp declines, with over $1 billion in crypto liquidations reported globally.

If a full-scale war erupts, experts warn of even greater volatility. Crypto mining operations in Iran, which accounts for nearly 4% of $BTC

Bitcoin’s global hash rate, could be disrupted by energy shortages or targeted cyberattacks. Moreover, sanctions could tighten around Iranian crypto exchanges, leading to liquidity issues for regional traders.

However, some analysts argue that crypto may ultimately benefit in the medium term. In times of currency devaluation or banking instability, citizens often turn to digital assets as an alternative store of value. This was evident during past crises, when Bitcoin recovered swiftly after initial shocks.

Still, the immediate outlook remains precarious. A prolonged conflict would likely fuel uncertainty, keep crypto markets choppy, and discourage institutional inflows. For now, traders are advised to watch geopolitical developments closely and brace for heightened volatility in the weeks ahead.

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