On June 13, 2025 at dawn, 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 millions of dollars in stablecoins. Bitcoin quietly fluctuated in the smoke of war, rising to nearly $110,000 before falling again. From 2020 to 2025, multiple major war conflicts have revealed Bitcoin's sensitive reaction to geopolitical events. This article will deeply analyze the impact of major war conflicts on Bitcoin price trends 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 20%, briefly breaking $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, as the war pushed European natural gas prices to historical peaks and the US 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 Israel 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 2022 Russia-Ukraine conflict. BlackRock ETF had a single-day net inflow of $420 million, forming a volatility buffer. Spot ETF daily trading volume accounted for 55%, with war sentiment diluted by institutional order flow.
Data from bitsCrunch 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 event's severity, 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 global economic downturn risks.
Data source: bitscrunch.com
The 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 the small Caucasian country ignited the crypto market was that the war did not change the global loose monetary policy, with the US Federal Reserve continuing its monthly $120 billion bond purchase program to irrigate risk assets. In contrast, during the Russia-Ukraine negotiations in March 2022, a brief hope for ceasefire was shattered by the Federal Reserve's announcement of a 50 basis point rate hike, causing Bitcoin to drop 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/Egyptian Pound OTC exchange rate premium dropped from 8.2% to 2.1%, with demand in war-torn regions gradually receding. The war narrative was quickly overshadowed by native narratives such as ETF approval and halving cycle. On January 15, 2025, Israel and Hamas agreed to a proposal for a ceasefire and prisoner exchange. Subsequently, Bitcoin rose sharply, breaking through $100,000 before falling. The market performance during the Middle East conflict prompted a re-examination of Bitcoin's safe-haven asset properties - 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; the Gaza underground network 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 alongside Wall Street. While mainstream markets focus on ETF capital flows, the demand for cryptocurrencies in war-torn regions becomes a new indicator for observing digital assets.
The current crypto market has formed a clear war response mechanism: oil prices triggering inflation alerts, the VIX panic index, and uncleared contracts on Deribit. According to bitsCrunch data, less than 5% of the hedging funds released by geopolitical conflicts ultimately flow into the crypto field, and this number may further shrink in the ETF era.
The real turning point lies in monetary policy. When the US Federal Reserve's rate cut channel opens, the signing of a ceasefire agreement will become an accelerator for capital inflow. On June 18, 2025, US rate futures prices reflected a 71% probability of a September rate cut by the Federal Reserve, up from 60% before the statement release. However, if the war causes an 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.
Crypto Market Recovery Mode Post-War
Looking at past conflicts, the end of war usually brings a gradual restoration of market confidence. For the Bitcoin market, the advancement of peace processes typically reduces geopolitical risk premiums, making investors more willing to take risks. This recovery in risk appetite often benefits the prices of risk assets like Bitcoin.
If Bitcoin demonstrates good risk resistance during wartime, institutional investors may increase its weight in their portfolios. Conversely, if its performance is poor, it may face pressure of capital outflow. Based on recent performance, Bitcoin's relative stability during geopolitical crises may enhance its standing among institutional investors.
Conclusion
Looking ahead, with continuous technological advancement and gradual regulatory framework improvement, 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 tool in the digital age has been initially established.
In this era of uncertainty, digital assets like Bitcoin are redefining our understanding of currency, value storage, and financial systems. Although the path may be challenging, the historical significance and potential value of this transformation cannot be overlooked.
