On June 13, alarms sounded throughout Israel, launching a preemptive strike against Iran. Israeli Defense Minister Katz declared a national state of emergency, stating that after Israel's attack on Iran, missile and drone strikes against Israel and its civilians are expected in the near future.
After the conflict erupted, BTC briefly dropped below $102,000, with a 24-hour decline of 5%; ETH briefly fell below $2,500, with a 24-hour decline of 9%.
According to Coinglass data, after the Israeli attack on Iran, liquidations totaled $1 billion in the past 12 hours, with long positions liquidating $937 million and short positions liquidating $67.71 million.
War has once again erupted in the Middle East, causing violent fluctuations in the cryptocurrency market. Over the past few years, local conflicts have occurred frequently, and for BTC, each conflict represents a test of its safe-haven attributes and market sentiment.
Russia-Ukraine War
During the Russia-Ukraine war in 2022, the role of cryptocurrencies as safe-haven assets, value transfer tools, and political funding mobilization methods was thoroughly amplified.
On February 17 that year, before the conflict with Russia, Ukraine announced the legalization of BTC.
On February 24, Putin announced a "special military operation" against Ukraine, causing BTC prices to plummet and global stocks and cryptocurrencies to experience a Black Thursday. By 6 PM on February 24, BTC crashed from around $39,000 to $35,094.2, with a 24-hour decline of 10% and a 7-day decline of 20.4%.
Under market expectations of sanctions or Russian funds moving to cryptocurrencies, BTC briefly rose above $45,000 after the sharp drop, but fell back to around $41,000 when reports emerged of attacks on Ukrainian nuclear power plants.
At the time, BTC mining power and transaction volumes in Ukraine and Russia were relatively small in global terms. There were rumors that Ukraine's largest BTC mining farm was hit by Russian guided missiles, going offline and reducing mining power by 33%. However, according to OKLink's on-chain data, BTC's global mining power showed no significant changes. Therefore, the Russia-Ukraine war itself was not technically sufficient to cause massive BTC market fluctuations, with market factors playing a more significant role.
Russia's invasion of Ukraine was dubbed the "world's first crypto war" because both sides discovered the advantages of a borderless, non-approved currency. In this crisis, cryptocurrencies became a notable highlight as donation and payment methods, generating massive support on Twitter.
On February 26, just two days after the war began, the Ukrainian government announced official BTC, ETH, and USDT donation addresses and began accepting crypto donations, with thousands of people donating millions of dollars in cryptocurrencies to help Ukraine resist 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, Palestinian armed group Hamas clashed with the Israeli Defense Forces, marking the start of a military confrontation. After the conflict erupted, BTC prices briefly plummeted to $27,000. By October 15, the Israel-Palestine conflict had caused over 4,000 deaths.
After the war broke out, both sides attempted to raise funds through cryptocurrencies for military expenses and relief. The Israeli crypto community established Crypto Aid Israel, while the Palestinian side also raised funds through cryptocurrencies.
BTC prices continued to decline until a week later, primarily due to a false tweet by crypto media Cointelegraph on the evening of October 16, claiming the US SEC had approved BlackRock's iShares BTC spot ETF.
Throughout October, armed conflicts continued, but BTC prices oscillated upward during the escalation. This was mainly due to three factors. First, the market's "immunity" to regional conflicts has gradually formed, with BTC being a global asset that historically responds limitedly to regional conflicts unless the war escalates to a global crisis (like the early stages of the Russia-Ukraine war). Although the Israel-Palestine conflict was intense, its geographical scope was relatively small, and the market viewed it as a "non-systemic risk".
Secondly, the Middle East has long been in an environment of financial instability and limited capital flow. The escalating conflict actually inspired regional funds to hedge and transfer via USDT or BTC, providing actual buying support for BTC.
Lastly, October 2023 coincided with US inflation declining, expectations of interest rates peaking strengthening, and continuous anticipation of spot BTC ETF approval, which became the primary macroeconomic backdrop driving market growth. Even with localized risk events, the loose liquidity environment and institutional positioning logic remained unchanged. For instance, during the BlackRock ETF application news, market risk appetite was already increasing.
Reviewing market performance in these two geopolitical conflicts reveals a clear pattern. Sudden war news often initially triggers panic selling, subsequently causing on-chain leverage liquidations, forming a synchronized decline from technical and sentiment perspectives. After liquidations clear, the market might stabilize or even rebound due to hedging needs and improved macro liquidity expectations. The current conflict between Israel and Iran may follow a similar trajectory.
Unlike traditional financial markets, crypto assets play a more complex role when facing war. On one hand, they are highly volatile risk assets, primarily impacted by sentiment. On the other hand, they are borderless, censorship-resistant financial tools that often become the last free capital channel in extreme events. Thus, each geopolitical sudden event is not just a test of market sentiment but also a stress test of crypto assets' practical functions.
Whether future wars will trigger similar reactions may not depend on the conflict's intensity but on whether it touches systemic risk thresholds or triggers global liquidity and confidence reassessment. However, we hope for world peace, and war should never become a standard variable in market fluctuations.
