This week, the situation in the Middle East has suddenly escalated, causing significant fluctuations in the cryptocurrency market. Following Israel's raid on multiple military and nuclear facilities in Iran on June 13, which triggered a missile retaliation from Iran, market panic intensified. Bitcoin (BTC) saw a maximum single-day drop of over 4%, while Ethereum (ETH) fell by as much as 8% during the day, with over $1 billion in liquidations across the network.
Although signs of easing tensions were observed on the 16th, the largest cryptocurrency exchange in Iran, Nobitex, was hacked on the 18th, further tightening market nerves, with "war on-chain" becoming the new focus.
Impact of the Conflict on Cryptocurrency Market Trends
- Sharp Decline (June 13–14)
The news of the Israeli raid triggered global risk aversion, leading to a significant sell-off in the cryptocurrency market: Bitcoin dropped from about $110,000 to $103,000, a decline of approximately 4% in one day. Ethereum plummeted 8%, falling to around $2,530; mainstream coins like Solana, Dogecoin, and Ripple (XRP) saw declines ranging from 7% to 9%, accompanied by over $1 billion in forced liquidations.
- Short-term Rebound (June 16)
The market observed signs of de-escalation in the conflict—Iran was reported to be seeking dialogue, and U.S. stocks and the FTSE rose briefly, with oil prices falling by 3%. Following the overall recovery in risk appetite, Bitcoin and a few other assets also experienced a rebound.
- Further Volatility and Hacker Attack Impact (June 18)
Nobitex suffered a devastating cyberattack, raising industry concerns about whether this signaled the conflict entering the "on-chain battlefield." As of June 18, Bitcoin consolidated in the range of $104,500 to $105,000, showing a flat oscillation. However, due to the risk aversion not fully dissipating, smaller coins remain vulnerable to shocks, creating uncertainty.
Recent Bitcoin Price Trends
Date
Bitcoin (BTC) Trend
Major News Drivers
June 10–12
Reached $110,000
Previous market sentiment stable
June 13
Dropped over 4% to $103,000
Escalation of conflict, risk aversion sell-off
June 14–15
Stabilized at $103,000 to $105,000
Market digested conflict news
June 16
Slight rebound
Signs of peace improved market sentiment
June 18
Traded between $104,000 and $106,000
Cyberattack impact offset rebound momentum
Review of Cryptocurrency Market Performance During War: Can Historical Trends Provide Answers?
In recent years, localized geopolitical conflicts have frequently erupted, with each conflict testing Bitcoin's safe-haven properties. Looking back, the response patterns of the cryptocurrency market under past war contexts may provide some reference for the current market direction.
Russia-Ukraine War
On February 24, 2022, Russia launched a full-scale military invasion of Ukraine. On the day the war broke out, the cryptocurrency market suffered a heavy blow, with Bitcoin's price plummeting from about $39,000 the previous day to $34,000, a drop of nearly 13%, while mainstream coins like Ethereum and Solana also saw significant declines. Many investors flocked to gold and the U.S. dollar amid spreading risk aversion, avoiding the more volatile digital assets, leading to a short-term divergence in the cryptocurrency market compared to traditional safe-haven assets.
In the following two days, Western countries announced financial sanctions against Russia, including freezing the assets of the Russian central bank, restricting its foreign exchange reserve operations, and removing some banks from the SWIFT system. Meanwhile, the Ukrainian Ministry of Finance released a cryptocurrency wallet address through official channels, requesting the international community to donate crypto assets. This move sparked a widespread response from the global crypto community. By the end of February, the Ukrainian government had received over $50 million in crypto donations, which soon exceeded $100 million.
As a result, the flow of funds began to reverse. Bitcoin's price rebounded sharply from February 26 to 28, recovering from around $34,000 to over $39,000. On one hand, investors anticipated that the Russia-Ukraine conflict might stimulate a reassessment of "decentralized assets"; on the other hand, the "on-chain donations" in the crypto market were seen as a demonstration of resilience, boosting short-term market confidence.
In early March, the Ukrainian government directly procured military supplies, including bulletproof vests and drones, through cryptocurrency, validating the practicality of crypto payments in wartime scenarios. At the same time, there was a surge in crypto trading volume within Russia, particularly with the trading pair of stablecoin USDT and the ruble trading at a premium of over 5% on some P2P platforms. Affected by sanctions, the Russian populace turned to on-chain assets to cope with exchange rate fluctuations and withdrawal restrictions. Crypto assets gradually became an important tool for both sides in the financial aspect of the war.
Subsequently, regulatory bodies began to intervene. The U.S. Treasury Department required major exchanges to identify and block Russian users on the sanctions list, with Coinbase, Binance, and others announcing restrictions on trading permissions for specific Russian accounts. Although the market experienced fluctuations, Bitcoin's price remained in the high range of $38,000 to $42,000 in early March.
After April, as the conflict entered a prolonged and localized stalemate, the cryptocurrency market no longer reacted sharply to single war news. However, various issues surrounding the war—including fundraising, sanctions evasion, and financial decoupling—kept cryptocurrencies in the spotlight in international public opinion and regulatory discussions, with on-chain trading activity and cross-border circulation capabilities becoming core variables in policy research across countries.
Israel-Hamas Conflict
In October 2023, Hamas launched an attack on Israel, causing the cryptocurrency market to dip shortly after the conflict news broke, with Bitcoin falling below $28,000 and Ethereum dropping over 3%.
Although Bitcoin did not exhibit the immediate safe-haven properties like gold during this conflict, as the situation evolved and global risk preferences were reallocated, its role as a "non-sovereign asset" gradually strengthened. Within just a week, the shift from correction to rebound highlighted the current cryptocurrency market's high sensitivity to geopolitical news and liquidity adaptability.
It is noteworthy that this round of conflict has once again reinforced the three-stage rhythm of "wartime volatility—risk aversion logic correction—on-chain monitoring," leading Bitcoin to be viewed once again as an unconventional safe-haven tool.
The Crypto Game Under the Shadow of War: Is it "Safe Haven Gold" or "Wartime Chip"?
The cryptocurrency market is undergoing a unique "wartime stress test." From the Russia-Ukraine conflict to the Israel-Hamas war, and now the sudden escalation of the situation in the Middle East, each round of geopolitical turbulence is reshaping the market's perception of the risk attributes of cryptocurrencies like Bitcoin. As risk aversion logic intertwines with on-chain risks, and as price reactions misalign with geopolitical rhythms, the market is searching for new reference coordinates.
History may not simply repeat itself, but paths often resonate. In a game of high uncertainty, investors may need to focus more on the cryptocurrency market's response rhythm, capital flows, and on-chain signals, rather than just single price fluctuations. Under the shadow of war, crypto assets are also answering an unresolved question: Are they risk assets or wartime chips?
Related: Israeli-backed organization leaks Nobitex source code after $100 million hack
Original article: “What Does the Historical Performance of the Crypto Market Under the Test of War Indicate?”
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