If the U.S. officially enters the conflict between Israel and Iran, Bitcoin and the entire crypto market may face a sharp decline in the short term.
Judging by the recent publications of Donald Trump and geopolitical rumors, the White House may decide to intervene. Analysts expect that in case of escalation, there will be an increase in risk aversion in global markets — liquidity will leave volatile assets.
Bitcoin is at risk of falling in case of U.S. intervention
Currently, Bitcoin is trading around $104,500, but in the event of a sharp deterioration in the situation, it could lose 10-20% in just a few days. Similar scenarios have already been observed during other geopolitical crises.
When a large-scale conflict begins, investors typically flee to traditional safe assets — the dollar, gold, and U.S. Treasury bonds.
Although crypto is often presented as an alternative to traditional assets, in stressful situations it behaves like a high-risk instrument.
Thus, at the beginning of the Russia-Ukraine war in 2022, Bitcoin lost more than 12% in just a week. Later, it partially recovered, but throughout the escalation, it moved in unison with the stock market.
On-chain metrics also confirm the rise in anxiety: leverage is decreasing, transfers to exchanges are increasing, and trading volumes are falling. All these signals indicate investor flight and a reduction in risks.
Macroeconomic factors will amplify volatility in the crypto market
If the U.S. does intervene and a full-scale conflict begins, oil prices may rise immediately. For #FRA (the Fed), this is a problem, as rates can no longer be lowered, meaning the course towards tight policy will have to be extended or even intensified.
A spike in energy prices could easily push inflation above 2%, especially considering how nervously WTI oil reacts to everything happening in the Middle East.
Supply disruptions, rising logistics costs — all this will hit businesses worldwide.
In such a case, the Fed will have to choose: save the economy or curb inflation. If they choose the latter, real yields will rise, and crypto will decline.
The yield on 10-year U.S. bonds is already approaching 4.4%. If military operation costs rise, it may continue to increase.
Against the backdrop of a national debt of $36 trillion, this will heighten concerns about budget sustainability, especially among large investors who are already anxiously monitoring the dynamics of debt markets.
At the same time, the dollar may strengthen. The DXY index is currently around 98.3, but in case of escalation, it is likely to continue rising. Global capitals usually flow into the dollar as a safe asset during such periods.
And the rise of the dollar historically puts pressure on Bitcoin and altcoins. This is especially felt in developing countries, where capital flows into U.S. currency.
The crypto market suffers even when turbulence increases in the traditional stock market.
The VIX index shows fear in the stock market. It usually rises during military and geopolitical crises. This leads to a reduction in risk positions and liquidations on crypto exchanges.
The future of Bitcoin depends on the duration of the conflict and the actions of the Fed.
If U.S. intervention turns out to be short-term and leads to a quick ceasefire, markets may recover losses. Historically, Bitcoin has rebounded 4-6 weeks after such shocks — this has already happened during past military crises.
But if the war drags on or spreads throughout the region, crypto may get stuck in turbulence for a long time: liquidity will leave, prices will be under pressure. Until it becomes clear how everything will end, investors are unlikely to take on risks.
On the other hand, if supply disruptions reignite inflation, Bitcoin may be remembered as a tool against currency devaluation.
But then the problem arises. High inflation is a reason for the Fed to maintain a tight policy, which means the crypto market will find it difficult to show stable growth.
Institutional investments in such conditions may pause or even decline. Positions in futures on CME, the volume of stablecoins, and activity in second-layer networks will become key indicators of sentiment in the coming weeks.
Key levels to watch are the psychological mark of $100,000 for Bitcoin and the zone of $2,000 for Ether.
If they do not hold, technical selling may increase pressure across the market and provoke a deeper correction for most large tokens.
What is important to track right now
Investors should closely monitor the following signals:
dynamics of oil prices and futures contracts
statements from the Fed on inflation and rates
results of government bond auctions and yield spreads
outflow of funds from exchanges and level of leverage in crypto
VIX index and other indicators of global risk
If the U.S. intervenes in the conflict, the short-term future of Bitcoin will depend not on its own factors, but on the macroeconomic agenda.
Traders should prepare for turbulence, hedge positions, and monitor the situation in real time.
