Will War Affect Cryptocurrency? Bitcoin’s Surprising Role in Geopolitical Crises

Will War Trigger a Crypto Collapse or Rally? Bitcoin’s Surprising Resilience Amid Geopolitical Tensions

The drums of war are beating again. On June 13, Israel launched preemptive strikes against Iran, triggering a nationwide emergency and fears of retaliatory missile attacks. Within hours, Bitcoin plunged below $102,000, shedding 5% in 24 hours, while Ethereum tumbled 9% to under $2,500. Over $10 billion in leveraged positions were liquidated, with longs bearing the brunt at $9.37 billion .

Yet, just days later, Bitcoin defied expectations—climbing back to $108,000 despite escalating Middle East tensions and fading hopes of U.S. rate cuts . This rollercoaster begs the question: Does war crash crypto, or does it fuel a flight to digital gold?

How Past Conflicts Shaped Crypto Markets

History offers clues. When Russia invaded Ukraine in February 2022, Bitcoin initially crashed 10% in a day, mirroring global markets. Yet, it rebounded swiftly as sanctions spurred crypto adoption for cross-border funding. Ukraine legalized Bitcoin days before the invasion and raised millions in crypto donations, while Russian entities reportedly turned to crypto to evade sanctions .

Similarly, during the 2023 Israel-Hamas conflict, Bitcoin briefly dipped to $27,000 before recovering. Analysts noted that localized conflicts often trigger short-term panic but rarely derail crypto’s long-term trajectory unless they escalate into systemic crises .

The Dual Role of Crypto in War: Safe Haven or Risk Asset?

Cryptocurrencies play a paradoxical role in geopolitical turmoil:

1. Short-Term Panic Selling – Sudden conflict news sparks mass liquidations, as seen in the $10 billion wipeout after Israel’s strike .

2. Long-Term Refuge Demand – In sanctioned economies like Russia and Iran, crypto becomes a lifeline for moving capital. AMLBot’s CEO Slava Demchuk notes, “Russian entities increasingly use crypto for cross-border transfers and sanctions evasion” .

Bitcoin’s recent rebound suggests institutional inflows (like spot Bitcoin ETFs adding $3 billion weekly ) may outweigh retail panic.

The Trump Factor: Tariffs, Tensions, and Crypto Policy

Beyond war, U.S. trade policies under President Trump add another layer. New tariffs on semiconductors and EVs could raise mining hardware costs, while trade barriers may boost stablecoin demand for cross-border payments .

Trump’s pro-crypto stance—including a $200 billion “Strategic Bitcoin Reserve”—could further legitimize crypto as a geopolitical tool, reinforcing dollar dominance via stablecoins like USDT (which holds $102.5B in U.S. Treasuries) .

What’s Next for Crypto in a War-Torn World?

Market signals remain mixed:

• Bullish Indicators: Neutral derivatives (BTC futures at 5% premium), steady ETF inflows, and institutional accumulation .

• Bearish Risks: Rising oil prices (WTI at $71.50) could fuel inflation, delaying Fed rate cuts—traditionally a headwind for risk assets .

Experts like MultiversX’s Dacian Cimpean warn that while crypto attracts war-driven capital, stricter sanctions enforcement could dampen momentum .

Conclusion: A Market Learning to Navigate Conflict

Crypto’s war-time volatility reflects its evolving identity—part speculative asset, part censorship-resistant haven. For now, Bitcoin’s rebound suggests institutional confidence outweighs geopolitical fear. But as conflicts escalate, traders must watch:

• Sanctions-driven crypto adoption (e.g., Russia, Iran).

• U.S. policy shifts (tariffs, Bitcoin reserves, stablecoin laws).

• Macro liquidity trends (Fed rates, oil shocks).

Will crypto emerge as the ultimate war-time asset? Share your thoughts on our X.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.

Sources:

1. Sina Finance – "Conflict Erupts, Who Pays? Past Wars’ Impact on Bitcoin"

2. Gate.io – "Trump’s 2025 Tariff Escalation: Crypto Market Implications"

3. Cointelegraph – "Bitcoin Nears New Highs as Traders Shrug Off War, Inflation"

4. Neuron Expert – "Geopolitical Tensions Push Sanctioned Regimes Toward Bitcoin"

5. DRCNet – "The Truth Behind the U.S. ‘Strategic Bitcoin Reserve’"