Can Bitcoin Survive the Geopolitical Tension? A Look at Israel and Iran's Conflict
2025-06-18
As geopolitical tensions between Iran and Israel continue to draw global concern, financial markets have started to reflect growing anxiety.
Bitcoin, which surged to $108,000 on June 16, quickly pulled back to around $105,000, suggesting that the rally may have been fueled more by speculation than by confidence.
This volatility underscores a growing question among investors, can Bitcoin remain stable amid worsening global conflicts, particularly in the Middle East? Check out this analysis.
Iran and Israel Conflict Puts Pressure on Global Markets
The recent escalation between Iran and Israel has not only intensified political discourse but has also sent ripples through international markets. For Bitcoin and other digital assets, the uncertainty adds a new layer of risk.
While cryptocurrencies are often viewed as alternative investments in times of economic or political unrest, their reaction to armed conflict is still unpredictable.
One of the key concerns is the potential disruption to oil supply chains, especially through the Strait of Hormuz. This narrow passage is one of the most critical chokepoints for global oil transportation, with nearly 20% of the world's supply passing through it.
Any disruption caused by military action from either Iran or Israel could significantly raise oil prices, which would, in turn, increase inflation.
Read More: What Happens If Iran and Israel Launch Nuclear Attacks? Experts Warn of Fallout
Energy Prices and Inflation May Weigh on Crypto
Tracy Jinn, Chief Operating Officer of the crypto exchange MEXC, noted that the Strait of Hormuz remains a major geopolitical flashpoint.
"There’s still one big risk to watch out for," Jinn stated. "Any kind of conflict could lead to a sharp rise in energy prices."
A spike in oil prices would likely push inflation higher in the second half of the year, forcing global central banks to delay or reconsider interest rate cuts. For financial markets, that would signal a move away from riskier assets.
Bitcoin, which has become increasingly correlated with broader macroeconomic trends, might not be spared from the impact.
According to Jinn, Bitcoin is now seen as a "macro beta" asset, meaning its performance closely follows global economic indicators. In such a scenario, continued conflict between Iran and Israel could lead to renewed volatility in the crypto market.
Read More: Iran vs Israel conflict peaks, JPMorgan warns of oil price shock
U.S. Involvement Could Shift the Market
Another concern raised in the markets is the possibility of United States involvement in the conflict. While there were public speculations, U.S. Congressman Thomas Massie clarified that any military action would require congressional approval.
At this point, the likelihood of direct U.S. involvement remains low. Prediction platform Polymarket estimated just a 2% chance of the U.S. declaring war on Iran before July.
Still, trading firms are preparing for the worst-case scenario. A market report by QCP Capital warned that any escalation involving the U.S. could cause widespread repricing across all risk assets.
“A potential Iranian blockade of the Strait of Hormuz could drive oil sharply higher. Any direct US military involvement would likely result in significant repricing,” the firm stated.
Read more about Bitcoin (BTC):
Bitcoin Price (BTC), Market Cap, Price Today & Chart History
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Bitcoin Traders Turn Cautious
As the situation unfolds, Bitcoin traders have started to adopt more defensive strategies. Derivatives data showed that the 25 Delta Risk Reversal metric turned negative.
This means there is currently greater demand for protective options (puts) than for bullish bets (calls), suggesting that traders are hedging against a potential price drop.
Despite this cautious sentiment, there were signs of continued institutional interest. Bitcoin Exchange-Traded Funds (ETFs) recorded $412 million in inflows on June 16, highlighting sustained long-term confidence in the asset. Whether this institutional momentum can counter short-term risks remains to be seen.
Market analyst Will Woo explained that Bitcoin could still face near-term pressure due to liquidation events.
He pointed to a possible price pullback toward the $100,000 to $103,000 range before any potential rebound to the $108,000 to $110,000 zone. A resolution or easing of tensions between Iran and Israel could be the catalyst for a recovery.
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FAQ
Why did Bitcoin’s price drop after reaching $108,000?
Bitcoin rose to $108,000 due to bullish positioning, but fell to $105,000 as market sentiment cooled and the initial war-related risk premium faded.
How does the Iran-Israel conflict affect Bitcoin?
The conflict creates uncertainty in global markets, particularly if it affects oil prices and inflation. This can lead to volatility in Bitcoin, as investors become more cautious.
What is the Strait of Hormuz and why is it important?
The Strait of Hormuz is a vital shipping route through which about 20% of the world’s oil passes. Any disruption could increase global energy prices and impact markets.
Is the U.S. likely to get involved in the Iran-Israel conflict?
As of now, U.S. involvement appears unlikely. Congressional approval would be required, and current forecasts show a low probability of action before July.
Could Bitcoin still rise despite the conflict?
Yes, if institutional inflows continue and tensions ease, Bitcoin could rebound. However, near-term volatility is expected due to market uncertainty and defensive trading behavior.
Disclaimer: The content of this article does not constitute financial or investment advice.
