Bitcoin in the Flames of War: Reviewing Past Geopolitical Conflicts, Which Stage Is the Crypto Market at Now?

Original | Odaily Planet Daily (@OdailyChina)

Author | jk

On February 28, 2026, the United States and Israel jointly launched a military strike against Iran. When the news broke, major global financial markets were already closed, but the crypto market alone bore the unwarranted pressure and divergence from safe-haven expectations. Bitcoin plummeted nearly 6% within 45 minutes, dropping from about $70,000—reached the previous week—to a recent low of $63,038, triggering approximately $515 million in forced liquidations and evaporating over $128 billion in total crypto market capitalization. The Crypto Fear & Greed Index immediately fell into the “Extreme Fear” zone.

Hayden Hughes, Managing Partner at Tokenize Capital, commented on the day of the attack: “Bitcoin is the only large liquid asset traded 24/7, so it absorbed all the selling pressure that would normally be spread across stocks, bonds, and commodities. True price discovery will only happen when the US stock market and Bitcoin ETFs reopen on Monday.”

For long-time followers of the crypto market, this scene related to geopolitical conflict is not unfamiliar.

Over the past four years, the crypto market has experienced three major geopolitical stress tests, each with different outcomes. This article from Odaily Planet Daily reviews Bitcoin’s performance during the Russia-Ukraine conflict, the Israel-Gaza war, and the India-Pakistan conflict, and combines market reactions and analyst predictions for the current US-Israel-Iran war to explore the evolving complex relationship between war and the crypto market.

Russia-Ukraine War (2022)

On February 24, 2022, Russia launched a full-scale invasion of Ukraine. Bitcoin dropped about 8% within hours, falling from around $37,000 to $34,413, with the entire crypto market cap evaporating roughly $160 billion within 24 hours. Stock markets also plunged, as investors rushed to escape risk assets.

However, just four days later, the market experienced a dramatic reversal. Bitcoin rebounded over 14% in a single day, the largest single-day gain in over a year. Within a month, the price was about 27% higher than before the invasion, reaching as high as $47,000.

This rebound was strongly influenced by the war, with a clear upward trend in Bitcoin demand. Analysts partly attributed this surge to Russians attempting to use crypto assets to evade sanctions, and to citizens in Russia and Ukraine transferring assets into cryptocurrencies after their banking systems were impacted. During this brief window, Bitcoin demonstrated some characteristics of an “anti-establishment currency”: in an extreme environment where sovereign currencies and traditional banks failed, people flocked to Bitcoin as a more stable store of value.

But this attribute did not last; in the following months, the Federal Reserve sharply raised interest rates, and macroeconomic conditions reversed sharply. From the collapse of Terra to the FTX meltdown, Bitcoin fell to around $16,000. The geopolitical premium sparked by the Russia-Ukraine conflict was overwhelmed by a larger cyclical bear market. Three months after the war began (by late May 2022), Bitcoin was around $29,000, a net decline of about 20% from before the conflict.

Israel-Gaza Geopolitical Conflict (2023)

On October 7, 2023, Hamas launched a surprise attack on Israel, triggering the ongoing Gaza conflict. This time, the crypto market was almost unaffected.

Bitcoin’s price only dropped 0.3% on the day of the conflict, closing at about $27,844. In the face of regional warfare causing tens of thousands of casualties, this was surprisingly indifferent. Four days after the outbreak, Bitcoin fell below $27,000, hitting a new low since September, but this was mainly attributed to negative investor sentiment from Middle East tensions. However, this was the full extent of the geopolitical impact on the market, which then quickly dissipated.

Fifty days after the conflict began, Bitcoin’s performance was well above its initial price. The war narrative was rapidly overtaken by crypto-native stories such as ETF approvals and halving cycles. Over the next three months, Bitcoin surged from below $27,000 to between $44,000 and $49,000, driven mainly by the historic approval of a Bitcoin spot ETF by the US SEC in January 2024. The Gaza conflict continued for over two years, during which Bitcoin reached a record high of $126,173. This indicates that as institutional investors and ETF funds entered in large numbers, Bitcoin’s price logic became increasingly driven by internal cycles rather than external geopolitical events. Even regional wars, no matter how intense, are now difficult to shake a mature financial market.

India-Pakistan Conflict (2025)

On May 7, 2025, India launched “Sindhur Operation,” targeting infrastructure of armed groups inside Pakistan with missile strikes, marking the most intense direct military confrontation between the two nuclear-armed nations in decades.

Following the news, Bitcoin briefly fell to about $94,671, and Ethereum dropped to $1,774, but the decline was very short-lived. Four days later, both sides announced a ceasefire. The crypto market rebounded, with Bitcoin climbing above $103,000. The market quickly returned to normal trading, and the impact of this conflict was so weak that it is almost impossible to find any trace of it in Bitcoin’s price charts afterward.

Iran: Where are we now, and where are we headed?

The outbreak of the current US-Israel-Iran conflict coincides with a historically fragile period for Bitcoin.

Bitcoin has fallen nearly 50% from its all-time high of $126,173 in October 2025. Since late October 2025, the entire crypto market has been under pressure. In February 2026, Bitcoin ETF saw a net outflow of about $3.8 billion in a single month, the worst since its launch, with total net outflows reaching $4.5 billion year-to-date. Meanwhile, gold ETFs attracted about $16 billion in net inflows during the same period, making the divergence between “digital gold” and physical gold one of the most prominent macro trends early 2026.

On the day the conflict erupted, U.S. President Trump confirmed that U.S. military forces had begun operations against Iran, causing the crypto market cap to evaporate about $128 billion within 24 hours, with over $515 million in forced liquidations.

By the second week of March, as U.S. Treasury Secretary Janet Yellen announced measures to curb oil prices, market sentiment improved significantly. On March 13, Bitcoin rose to around $73,800, approaching a one-month high, with nearly a 5% daily increase—the first Friday rally since the outbreak of the Iran conflict. On March 16, Bitcoin further climbed to about $73,882 and broke above the 50-day moving average. This was the first such breakout in two months and was seen by analysts as an important mid-term trend reversal signal. As of the time of writing, Bitcoin has rebounded over 17% from its initial post-conflict lows.

Similar to the past, but with more variables

This pattern closely resembles previous conflict “scripts”—sharp decline, rebound, digestion. If the script is exactly the same, then we are likely at the stage of beginning to digest.

Looking back at the three conflicts over the past four years, one clear trend is that geopolitical events themselves have become less capable of leaving lasting marks on Bitcoin’s price. The real impact of the Russia-Ukraine war was not the conflict itself but the sanctions it triggered against Russia, which pushed up global inflation. The Gaza and India-Pakistan conflicts further proved that regional military conflicts, no matter how intense, will only cause short-term volatility unless they substantially disrupt energy supplies or global monetary policy. After a brief shock, the crypto market tends to quickly revert to its own narrative.

Whether the current US-Israel-Iran conflict is an exception depends critically on oil prices. The Strait of Hormuz carries about one-fifth of the world’s oil flow. If it is truly blocked, inflation will reignite, the Fed’s rate cut expectations will be dashed, and Bitcoin, as a risk asset, will face macro pressures far beyond the initial panic sell-off. Conversely, if the conflict remains within current intensity levels, oil prices fall back, and negotiations resume, then based on historical experience, the impact of this war on Bitcoin’s price will gradually fade.