On June 13, 2025, in the early morning, Israel launched the "Lion's Rise Operation", attacking multiple cities, military bases, and nuclear facilities in Iran. Recently, Iran's largest crypto exchange Nobitex was attacked by Israeli hackers, causing losses of tens of millions of dollars in stablecoins. Bitcoin quietly fluctuated amid the smoke of war, rising close to $110,000 before falling again. From the 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 in the past five years and the recovery trajectory of the crypto market after wars.
Watershed Moment of Russia-Ukraine Conflict
The Russia-Ukraine conflict fully erupted on February 24, 2022. The outside world speculated that Russian funds would flow into cryptocurrencies like Bitcoin, causing Bitcoin's price to surge by 20%, briefly breaking through $45,000. At the same moment, Russian oligarchs attempted to transfer frozen assets through Bitcoin, seemingly confirming the "crisis value" of cryptocurrencies.
However, in the long term, when the war pushed European natural gas prices to historical peaks and the Federal Reserve was forced to launch the most aggressive rate hike in forty years, Bitcoin experienced a 65% crash in 2022. Although this decline cannot be entirely attributed to the war, geopolitical uncertainty undoubtedly exacerbated market pessimism.
Data source: bitscrunch.com
Interestingly, the war's continuity provided a 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. Meanwhile, facing Western sanctions, Russia also turned to cryptocurrencies to some extent as a tool to circumvent sanctions, further strengthening Bitcoin's position as an alternative financial instrument.
It's worth noting that in 2014, Bitcoin entered a long-term bear market after Russia's invasion of Ukraine. However, by 2022, Bitcoin had developed into a larger, stronger asset class more accepted by institutional investors.
Market Test of Israeli War
On October 7, 2023, the Israel-Gaza conflict war broke out. On October 11, according to bitsCrunch data, Bitcoin fell below $27,000, hitting a new low since September, with traders generally attributing this to the negative impact of Middle East conflict on investor sentiment. During the 2023 Gaza conflict, USDT transfer volume increased by 440% week-on-week, with stablecoins becoming a new infrastructure.
Since the start of the Israel-Hamas conflict, digital asset prices have not shown significant volatility. This relative stability reflects the reduced sensitivity of the crypto market to geopolitical events.
Iran-Israel Conflict
During the Iran-Israel conflict in April 2024, on the day of missile attacks, Bitcoin's volatility was only ±3%, less than one-third of the volatility during the Russia-Ukraine war. BlackRock ETF had a single-day net inflow of $420 million, forming a volatility buffer. Spot ETF's daily trading volume accounted for 55%, with war sentiment diluted by institutional order flow.
bitsCrunch data shows that even during major geopolitical events like Israel's air strikes on Iran, the Bitcoin market did not enter a panic mode. Although Bitcoin fell 4.5% to $104,343 and Ethereum dropped 8.2% to $2,552 within the first 24 hours of the war in June 2025, these declines were still controllable relative to the severity of the event, demonstrating strong resilience.
However, according to the Geopolitical Risk (GPR) index, we find that the index is currently trending upward, around 158. The previous time it exceeded 150 was in early 2024. This index was constructed by Dario Caldara and Matteo Iacoviello. The GPR index peaked before and after two world wars, during the early stages of the Korean War, during the Cuban Missile Crisis, and after the "9/11" event. The higher the geopolitical risk, the lower the investment, stock prices, and employment rates. Higher geopolitical risk increases the probability of economic disasters and the downside risk of the global economy.
Data source: bitscrunch.com
Best Window to Observe Capital Logic
The moment a ceasefire agreement is signed is often the best window to observe capital logic. In November 2020, when the Nagorno-Karabakh war ended, Bitcoin nearly doubled in the following 30 days. The core reason this territorial dispute in a small Caucasian country ignited the crypto market was that the war did not change the global loose policy, with the Federal Reserve's monthly $120 billion bond-buying program continuing to irrigate risk assets. In contrast, in March 2022, during the Russia-Ukraine negotiations, the brief hope of a ceasefire was shattered by the Federal Reserve's 50 basis point rate hike forecast, causing Bitcoin to fall 12%.
Data source: bitscrunch.com
On the day of the temporary Israel-Palestine ceasefire in November 2023, the crypto derivatives market liquidated $210 million. The BTC to Egyptian pound exchange rate premium on the OTC exchange dropped from 8.2% to 2.1%, with demand in war-torn areas gradually receding. The war narrative was quickly overshadowed by ETF approval and halving cycle narratives. On January 15, 2025, Israel and Hamas agreed to a ceasefire and prisoner exchange proposal. Subsequently, Bitcoin rose sharply, breaking through $100,000 again before falling. The market performance during the Middle East conflict prompted a re-examination of Bitcoin's safe-haven asset attributes - Bitcoin and Ethereum cannot yet be viewed as safe-haven assets in the gold market.
Entering the Institutional Era
The war value of digital assets has not disappeared but is being reconstructed in scenarios. The Ukrainian government received $127 million in crypto donations, accounting for 6.5% of its early international aid; Gaza underground networks maintained communication networks through Bitcoin mining machines; Iranian oil merchants used mixers to bypass sanctions... These real applications in marginal areas are forming a parallel dark line ecosystem. While mainstream markets focus on ETF fund flows, the demand for cryptocurrencies in war-torn areas has become a new indicator for observing digital assets.
The current crypto market has formed a clear war response mechanism: oil prices triggering inflation alerts, VIX panic index, and uncleared contracts on Deribit. bitsCrunch data shows that less than 5% of safe-haven funds released by geopolitical conflicts ultimately flow into the crypto field, a number that may further shrink in the ETF era.
The real turning point lies in monetary policy. When the Federal Reserve's rate cut channel opens, ceasefire agreements will become accelerators for capital inflow. On June 18, 2025, US rate futures prices reflected a 71% probability of a Federal Reserve September rate cut, up from 60% before the statement release. However, if the war causes energy supply chain disruption, even if hostilities subside, the shadow of stagflation will still suppress the crypto market. Focusing on the Federal Reserve's interest rates remains crucial.
Post-War Recovery Pattern in the Crypto Market
From past conflicts, the end of war typically brings a gradual restoration of market confidence. For the Bitcoin market, the advancement of peace processes usually reduces geopolitical risk premiums, making investors more willing to take risks. This recovery in risk appetite often benefits the price performance of risk assets like Bitcoin.
If Bitcoin demonstrates good risk resistance during the war, institutional investors might increase its weight in their portfolios. Conversely, if its performance is poor, it may face pressure of capital outflows. Based on recent performance, Bitcoin's relative stability during geopolitical crises might enhance its standing among institutional investors.
Conclusion
Looking forward, with continuous technological advancement and gradual improvement of regulatory frameworks, cryptocurrencies like Bitcoin are expected to play a more important role in the global financial system. Although short-term challenges and volatility may persist, its position as a crucial financial instrument in the digital era has been initially established.
In this era of uncertainty, digital assets like Bitcoin are redefining our understanding of currency, value storage, and financial systems. While the path may be challenging, the historical significance and potential value of this transformation cannot be overlooked.
