Written by: bitsCrunch
From Ukraine to Iran, the investment logic and role evolution of Bitcoin under geopolitics.
In the early morning of June 13, 2025, Israel launched Operation Lion Rise, attacking several Iranian cities, military bases and nuclear facilities. Recently, Iran's largest crypto exchange Nobitex was attacked by Israeli hackers, resulting in tens of millions of dollars in stablecoin losses. Bitcoin fluctuated quietly in the smoke, rising all the way to nearly $110,000 before falling again. From the many major war conflicts that occurred between 2020 and 2025, we can observe the sensitivity of Bitcoin prices to geopolitical events. This article will deeply analyze the impact of major war conflicts on Bitcoin price trends in the past five years, as well as the recovery trajectory of the crypto market after the end of past wars.
The Russian-Ukrainian conflict broke out on February 24, 2022, and there was speculation that Russian funds would flow into cryptocurrencies such as Bitcoin. The price of Bitcoin soared 20%, breaking through $45,000 at one point. At the same time, Russian oligarchs tried to transfer frozen assets through Bitcoin, which seemed to confirm the "crisis value" of cryptocurrencies.
In the long run, however, when the war pushed European natural gas prices to historical peaks and the Federal Reserve was forced to start the most aggressive rate hike in four decades, Bitcoin staged a 65% crash in 2022. Although this decline cannot be attributed entirely to the war, geopolitical uncertainty has undoubtedly exacerbated market pessimism.
Data source: bitscrunch.com
Interestingly, the persistence of the war has provided new narrative support for Bitcoin. The Ukrainian government has raised millions of dollars in donations through cryptocurrencies, highlighting the unique value of digital currencies in the context of the constraints of the traditional financial system. At the same time, in the face of Western sanctions, Russia has also turned to cryptocurrencies as a tool to circumvent sanctions to a certain extent, which further strengthens Bitcoin's position as an alternative financial instrument.
It is worth noting that in 2014, Bitcoin fell into a long bear market after Russia invaded Ukraine. However, by 2022, Bitcoin has developed into a larger, stronger, and more accepted asset class by institutional investors.
On October 7, 2023, the Israel-Gaza conflict broke out. On October 11, according to bitsCrunch data, Bitcoin fell below $27,000, hitting a new low since September, and traders generally attributed this to the negative impact of the Middle East conflict on investor sentiment. During the Gaza conflict in 2023, USDT transfer volume increased by 440% week-on-week, and stablecoins are becoming new infrastructure.
Since the start of the Israel-Hamas conflict, digital asset prices have not fluctuated significantly. This relative stability reflects the reduced sensitivity of the cryptocurrency market to geopolitical events.
During the Iran-Israel conflict in April 2024, the volatility of Bitcoin was only ±3% on the day of the missile attack, which was less than 1/3 of the volatility when the Russian-Ukrainian war broke out in 2022. BlackRock ETF had a net inflow of $420 million in a single day, forming a volatility buffer. The average daily trading volume of spot ETFs accounted for 55%, and the war sentiment was diluted by institutional order flow.
BitsCrunch data shows that even in major geopolitical events such as Israel's air strikes on Iran, the Bitcoin market has not entered a panic mode. Although Bitcoin fell 4.5% to $104,343 and Ethereum fell 8.2% to $2,552 in the first 24 hours of the war in June 2025, this decline was still controllable relative to the severity of the incident, showing strong resilience.
However, according to the Geopolitical Risk (GPR) Index, we find that, for now, the index is on an upward trend, around 158. The previous time point of exceeding 150 was in early 2024. This index was constructed by Dario Caldara and Matteo Iacoviello. The Geopolitical Risk (GPR) Index peaked before and after the two world wars, in the early days of the Korean War, during the Cuban Missile Crisis, and after the "9.11" incident. The higher the geopolitical risk, the lower the investment, stock prices and employment rates. The higher the geopolitical risk, the higher the probability of economic disaster and the greater the downside risk of the global economy.
Data source: bitscrunch.com
The moment when the ceasefire agreement is signed is often the best window to observe capital logic. The Nagorno-Karabakh War ended in November 2020, and Bitcoin nearly doubled in the following 30 days. The reason why this territorial dispute in the small Caucasus country detonated the crypto market is that the war has not changed the global easing tone, and the Fed's monthly bond purchase plan of $120 billion continues to irrigate risky assets. Mirroring this is the March 2022 Russia-Ukraine negotiations, where the brief ceasefire hopes were shattered by the Fed's announcement of a 50 basis point rate hike, and Bitcoin fell 12% in response.
Data source: bitscrunch.com
On the day of the temporary ceasefire between Palestine and Israel in November 2023, the crypto derivatives market exploded by $210 million. The premium of the BTC to Egyptian pound exchange rate on the Egyptian OTC exchange fell from 8.2% to 2.1%, and demand in war-torn areas gradually receded. The war narrative was soon covered by native narratives such as ETF approval and halving cycles. On January 15, 2025, Israel and Hamas agreed to a ceasefire and prisoner exchange proposal. Bitcoin then rose sharply, breaking through $100,000 again before falling. The market performance during the Middle East conflict prompted people to re-examine Bitcoin's safe-haven asset attributes - Bitcoin and Ethereum cannot yet be regarded as safe safe-haven assets in the gold market.
The war value of digital assets has not disappeared, but is being reconstructed in a scenario. The $127 million in crypto donations received by the Ukrainian government accounted for 6.5% of its early international aid; the Gaza underground network maintained a communication network through Bitcoin mining machines; Iranian oil traders used mixers to break through sanctions... These real applications in the fringe are forming a dark line ecology that is in line with Wall Street. While the mainstream market focuses 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: crude oil prices trigger inflation alarms, VIX panic index, and open contracts on Deribit. According to bitsCrunch data, less than 5% of the safe-haven funds released by geopolitical conflicts eventually flow into the crypto field, and this figure may shrink further in the ETF era.
The real turning point lies in monetary policy. When the Fed's interest rate cut channel is opened, the signing of a ceasefire agreement will become an accelerator for capital inflows. On June 18, 2025, U.S. interest rate futures prices reflected a 71% probability of a September rate cut by the Fed, compared with 60% before the announcement, and the probability of a September rate cut increased slightly. However, if the war causes a break in the energy supply chain, even if the war subsides, the shadow of stagflation will still suppress the crypto market. Paying attention to the Fed's interest rate is still a top priority.
From the perspective of ended conflicts, the end of war usually brings about a gradual recovery of market confidence. For the Bitcoin market, the advancement of the peace process usually reduces the geopolitical risk premium, making investors more willing to take risks. This recovery in risk appetite is often conducive to the price performance of risky assets such as Bitcoin.
If Bitcoin shows good risk resistance during the war, institutional investors may increase its weight in their portfolios. On the contrary, if it performs poorly, it may face pressure for capital outflow. Judging from its recent performance, Bitcoin's relative stability in geopolitical crises may enhance its status in the minds of institutional investors.
Looking forward, with the continuous advancement of technology and the gradual improvement of the regulatory framework, cryptocurrencies such as Bitcoin are expected to play a more important role in the global financial system. Although it may still face various challenges and fluctuations in the short term, its status as an important financial tool in the digital age has been initially established.
In this era of uncertainty, digital assets such as Bitcoin are redefining our understanding of currency, value storage, and financial systems. Although the road may be challenging, the historical significance and potential value of this change cannot be ignored.
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