Author: shushu, BlockBeats
Original Title: $1 Billion Liquidation, How Did the Previous International War Affect Bitcoin?
On June 13, air raid sirens 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 attacks targeting Israel and its civilians are expected in the near future.
After the conflict erupted, Bitcoin briefly dropped below $102,000, with a 24-hour decline of 5%; Ethereum briefly fell below $2,500, with a 24-hour decline of 9%.
According to Coinglass data, after Israel's attack on Iran, the entire network experienced $1 billion in liquidations over 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 Bitcoin, each conflict represents a test of its safe-haven attributes and market sentiment volatility.
Russia-Ukraine War
During the outbreak of the Russia-Ukraine war in 2022, the role of cryptocurrencies as a safe-haven asset, value transfer tool, and political fund mobilization method was completely amplified.
On February 17 that year, before the conflict with Russia, Ukraine announced the legalization of Bitcoin.
On February 24, Putin announced a "special military operation" against Ukraine, causing Bitcoin prices to plummet and global stocks and cryptocurrencies to experience a Black Thursday. By 6 PM on February 24, Bitcoin 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 pushing Russian funds towards cryptocurrencies, Bitcoin briefly rose above $45,000 after the sharp drop. However, when reports emerged of attacks on Ukrainian nuclear power plants, Bitcoin fell back to around $41,000.
At that time, Bitcoin hash rate and transaction volumes in Ukraine and Russia were relatively small in global totals. In terms of hash rate, there were rumors that Ukraine's largest Bitcoin mining farm was hit by Russian guided missiles, going offline and causing a 33% hash rate drop. However, according to data from OKLink's chain master, Bitcoin's global hash rate showed no significant changes. Therefore, the Russia-Ukraine war itself was not technically sufficient to cause massive Bitcoin market fluctuations, with market factors playing a more significant role.
Russia's invasion of Ukraine was called the "world's first crypto war" because both sides discovered the advantages of a borderless, non-approved currency. In this Russia-Ukraine crisis, cryptocurrencies became a notable highlight as a donation and payment method, sparking widespread 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 declared acceptance of cryptocurrency donations. Thousands of people donated millions of dollars in cryptocurrencies to help Ukraine resist Russia. Crypto Twitter also mobilized to raise funds for Ukraine, with Pussy Riot 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 organization Hamas clashed with the Israeli Defense Forces, marking the start of a round of military conflict. After the conflict erupted, Bitcoin 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 Israeli and Palestinian 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.
Bitcoin 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 "US SEC approves BlackRock's iShares Bitcoin spot ETF".
Throughout October, armed conflicts continued, but Bitcoin prices oscillated upward during the escalation. The reasons behind this mainly manifested in three aspects. First, the market's "immunity" to regional conflicts has gradually formed. Bitcoin is a global asset, and historically, its response to regional conflicts has been relatively limited, unless the war escalates into 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 escalation of conflicts actually inspired regional funds to hedge and transfer through USDT or BTC, providing actual buying support for Bitcoin.
Lastly, October 2023 coincided with declining US inflation, strengthened expectations of interest rate peaks, and continuous anticipation of Bitcoin spot ETF approval. These became the primary macroeconomic background driving market growth. Even with local 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 enhanced.
Reviewing market performance in the past 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 driven by technical and sentiment factors. After liquidations clear, the market might stabilize or even rebound due to risk-averse capital inflows and improved macro liquidity expectations. The current conflict between Israel and Iran may likely follow a similar path.
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 channel for funds in extreme events. Because of this, 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 that war never becomes a regular variable in market fluctuations.
