On June 13, sirens sounded throughout Israel as it launched a preemptive strike against Iran. Israeli Defense Minister Katz announced a nationwide state of emergency, stating that after Israel's attack on Iran, missile and drone strikes against Israel and its civilians were expected in the near future.
After the outbreak of the conflict, Bitcoin briefly fell below 102,000 dollars, with a 24-hour drop of 5%; Ethereum briefly fell below 2,500 dollars, with a 24-hour drop of 9%.
According to Coinglass data, after the Israeli attack on Iran, there was a liquidation of 1 billion dollars across the network in the past 12 hours, of which long positions accounted for 937 million dollars and short positions accounted for 67.71 million dollars.
War has once again erupted in the Middle East, causing violent fluctuations in the cryptocurrency market. In recent years, localized wars have occurred frequently, and for Bitcoin, each conflict represents a test of its safe-haven properties and significant market sentiment volatility.
Russia-Ukraine War
At the onset of the Russia-Ukraine war in 2022, the role of cryptocurrency as a safe-haven asset, a value transfer tool, and a means of political fund mobilization was thoroughly amplified.
On February 17 that year, prior to the conflict with Russia, Ukraine announced the legalization of Bitcoin.
On February 24, Putin announced a 'special military operation' against Ukraine, causing Bitcoin's price to plummet, and global stock markets and cryptocurrencies faced a black Thursday. By 6 PM on February 24, Bitcoin fell from about 39,000 dollars to 35,094.2 dollars, with a 24-hour drop of 10% and a 20.4% drop over the past week.
In anticipation of sanctions or the push for Russian funds to flow into cryptocurrencies, Bitcoin initially rose to 45,000 dollars after a sharp decline; however, when reports emerged of attacks on a Ukrainian nuclear power plant, Bitcoin fell back to around 41,000 dollars.
At that time, the Bitcoin hash rate and trading volume in Ukraine and Russia accounted for a very small proportion of the global total. There were rumors that Ukraine's largest Bitcoin mine was hit by a Russian missile, causing it to go offline and the hash rate to drop by 33%. However, according to data from OKLink, there was no significant change in Bitcoin's total network hash rate at that time. Therefore, the Russia-Ukraine war itself was not enough to technically create huge fluctuations in Bitcoin's market; more factors still lie within the market itself.
The Russian invasion of Ukraine is referred to as 'the world's first crypto war' because both sides have recognized the advantages of a borderless, unrecognized currency. During the Russia-Ukraine crisis, cryptocurrency became an important highlight as a means of donation and payment, generating substantial support on Twitter.
On February 26, just two days after the war began, the Ukrainian government announced the official donation addresses for BTC, ETH, and USDT, declaring that it would accept cryptocurrency donations. Thousands of people donated millions of dollars worth of cryptocurrency to help Ukraine counter Russia. Crypto Twitter also mobilized to raise funds for Ukraine, with Pussy Riot's founder, Trippy Labs, and PleasrDAO members launching 'Ukraine DAO' to help those harmed by the invasion.
Israel-Palestine Conflict
On October 7, 2023, the Palestinian militant group Hamas clashed with the Israel Defense Forces, marking the official start of a round of military conflict between Israel and Palestine. Following the outbreak of the conflict, Bitcoin's price briefly plummeted to 27,000 dollars. As of October 15, the Israel-Palestine conflict had resulted in over 4,000 deaths.
After the outbreak of the war, both sides in the Israel-Palestine conflict attempted to raise funds through cryptocurrency for military expenses, relief, and more. Among them, the Israeli crypto community established Crypto Aid Israel, while the Palestinian side also raised funds through cryptocurrency.
Bitcoin's price continued to decline until a week later when the main reason for the recovery was the false news tweet released by crypto media Cointelegraph on the evening of October 16, stating that the U.S. SEC had approved BlackRock's iShares Bitcoin spot ETF.
Throughout October, armed conflicts continued, yet Bitcoin's price oscillated upward during the escalation of conflicts. The main reasons behind this can be seen on three levels. First, the market has gradually developed an 'immunity' to regional conflicts. Bitcoin is a global asset and historically has had a limited response to regional conflicts, unless the war escalates into a global crisis (like the early stages of the Russia-Ukraine war). Although the Israel-Palestine conflict is intense, its geographical scope is relatively small, and the market views it as a 'non-systemic risk.'
Secondly, the Middle East has long been in an environment of financial instability and restricted capital flows. The escalation of conflicts has actually stimulated regional funds to seek refuge through USDT or BTC, providing actual buying support for Bitcoin.
Finally, October 2023 coincided with a decline in U.S. inflation and heightened expectations for interest rate peaks, while the approval expectations for a spot Bitcoin ETF continued to rise, becoming the main macro backdrop for the market's upward movement. Even in the face of localized risk events, the liquidity environment remains loose, and institutional positioning logic has not changed; for example, during the period of BlackRock's ETF application news, market risk appetite had already increased.
Looking back at the market performance during the last two geopolitical conflicts, a clear pattern can be observed. Sudden war news often first triggers panic selling, which then leads to on-chain leveraged liquidations, forming a resonance decline in both technical and emotional aspects; however, after the liquidations are cleared, the market may gradually stabilize or even rebound due to factors such as safe-haven demand returning and improved macro liquidity expectations. This time, the conflict between Israel and Iran may also follow a similar path.
Unlike traditional financial markets, the role of crypto assets in the face of war is more complex. On one hand, it is a highly volatile risk asset, initially impacted by emotional shocks. On the other hand, it is a borderless, censorship-resistant financial tool that often becomes the last free channel for funds in extreme events. For this reason, each geopolitical sudden event is not only a test of market sentiment but also a stress test of the real functions of crypto assets.
Whether future wars will trigger similar reactions may not hinge on the intensity of the conflicts themselves but rather on whether they touch the threshold of systemic risk and whether they prompt a reassessment of global liquidity and confidence. However, we hope for world peace, and that war will never again become a regular variable in market fluctuations.$BTC $ETH