War and Bitcoin: A Five-Year Price Trajectory Depth Analysis

On June 13, 2025, Israel launched attacks on multiple cities, military bases, and nuclear facilities in Iran. Recently, Iran's largest cryptocurrency exchange suffered a hacking attack, resulting in significant losses of stablecoins. The price of Bitcoin fluctuated in the turmoil, briefly approaching $110,000 before retreating. Looking back at the major conflicts from 2020 to 2025, we can observe Bitcoin's sensitive response to geopolitical events. This article will delve into the impact of major conflicts over the past five years on Bitcoin's trend, as well as the recovery patterns of the cryptocurrency market post-war.

Russia-Ukraine Conflict: Watershed Moment

Market fluctuations in the early stages of war

On February 24, 2022, the Russia-Ukraine conflict fully broke out, and there were speculations that Russian funds might shift to cryptocurrency, with Bitcoin's price soaring by 20% to break the $45,000 mark. At the same time, some Russian billionaires attempted to transfer frozen assets through Bitcoin, seemingly confirming the "crisis value" of cryptocurrencies.

However, in the long run, as the war drives up energy prices in Europe and the Federal Reserve is forced to aggressively raise interest rates, Bitcoin experienced a 65% drop in 2022. Although the decline cannot be entirely attributed to the war, the geopolitical uncertainty undoubtedly exacerbated market pessimism.

Interestingly, the ongoing war has provided a new narrative support for Bitcoin. Ukraine has raised a large amount of donations through cryptocurrency, highlighting the unique value of digital currency when traditional finance is restricted. At the same time, in the face of sanctions, Russia has also turned to cryptocurrency to a certain extent, further strengthening Bitcoin's position as an alternative financial tool.

It is worth noting that after Russia invaded Ukraine in 2014, Bitcoin fell into a prolonged bear market. However, by 2022, Bitcoin had developed into a larger, stronger, and more institutionally accepted asset class.

Israel-Gaza Conflict: Market Test

Short-term impact and rapid recovery

On October 7, 2023, the Israel-Gaza conflict erupted. On October 11, Bitcoin fell below $27,000, hitting a new low since September, widely believed to be due to the negative impact of the Middle East conflict on investor sentiment. During the conflict, the weekly transfer volume of USDT increased by 440%, and stablecoins are becoming a new infrastructure.

However, since the conflict began, the prices of digital assets have not experienced significant fluctuations. This relative stability reflects a reduced sensitivity of the cryptocurrency market to geopolitical events.

Iran-Israel Conflict

In April 2024, the conflict between Iran and Israel erupted, with Bitcoin's volatility on the day of the missile attack being only ±3%, far lower than during the outbreak of the Russia-Ukraine war in 2022. A certain ETF saw a net inflow of $420 million in a single day, creating a volatility buffer. The average daily trading volume of spot ETFs accounted for 55%, as war sentiment was diluted by institutional order flow.

Even in significant events like Israel's airstrike on Iran in June 2025, the Bitcoin market did not panic. Although Bitcoin fell by 4.5% to $104,343 within the first 24 hours of the war, and Ethereum dropped by 8.2% to $2,552, the declines were manageable relative to the severity of the events, demonstrating strong resilience.

However, the geopolitical risk index is on the rise, standing at around 158. The last time it exceeded 150 was in early 2024. This index peaks during significant historical events, with higher indices indicating greater risks of a global economic downturn.

Observation Window of Capital Logic

The signing of a ceasefire agreement is often the best window to observe capital logic. After the war in a certain region ended in November 2020, Bitcoin nearly doubled within 30 days. The core issue is that the war did not change the global easing tone, and the Federal Reserve's continued bond-buying program nourished risk assets. In contrast, during the negotiations in a certain region in March 2022, hopes for a ceasefire were shattered by expectations of Federal Reserve interest rate hikes, and Bitcoin fell by 12%.

On the day of the temporary ceasefire in a certain region in November 2023, the crypto derivatives market experienced a liquidation of $210 million. The BTC premium on a certain nation's over-the-counter exchange fell from 8.2% to 2.1%, indicating a retreat in demand from war-torn areas. The narrative of war was quickly overshadowed by native narratives such as ETF approvals and halving cycles. On January 15, 2025, the parties reached a ceasefire agreement, after which Bitcoin broke through $100,000 before pulling back. This prompted a reevaluation of Bitcoin's safe-haven properties.

Entering the Institutional Era

The war value of digital assets is being reconstructed in scenarios. The $127 million in crypto donations received by a certain country's government accounts for 6.5% of early international aid; a certain region maintains communication through Bitcoin mining machines; a certain country's merchants use mixers to break sanctions... These marginal applications are forming an ecosystem parallel to the mainstream market. While the mainstream focuses on ETF fund flows, the demand for cryptocurrencies in war-torn areas has become a new observation indicator.

The current market has formed a clear war response mechanism: crude oil prices trigger inflation alerts, VIX index, open interest contracts, etc. Less than 5% of the safe-haven funds released by geopolitical conflicts flow into the cryptocurrency sector, and this ratio may further decrease in the ETF era.

The real turning point lies in monetary policy. When the Federal Reserve begins to cut interest rates, the ceasefire agreement will become an accelerator for capital inflow. On June 18, 2025, U.S. interest rate futures showed a 71% probability of a rate cut in September, an increase from before. However, if the war leads to a rupture in the energy supply chain, even if the conflict subsides, the shadow of stagflation will still suppress the cryptocurrency market. Paying attention to the Federal Reserve's interest rate policy remains a top priority.

Post-war Crypto Market Recovery Model

From the perspective of the concluded conflicts, the end of war usually leads to a gradual restoration of market confidence. For Bitcoin, the advancement of the peace process will reduce geopolitical risk premiums, enhance investors' risk appetite, and benefit the performance of assets such as Bitcoin.

If Bitcoin demonstrates good risk resistance during the war, institutional investors may increase their allocation. Conversely, they may face pressure from capital outflows. From recent performance, Bitcoin's relative stability during crises may enhance its status in the minds of institutional investors.

Conclusion

Looking ahead, with technological advancements and improved regulation, cryptocurrencies like Bitcoin are expected to play a more important role in the global financial system. Although challenges and volatility remain in the short term, its position as an important financial tool in the digital age has been initially established.

In this era filled with uncertainty, digital assets such as Bitcoin are redefining our understanding of currency, value storage, and financial systems. Although the road is fraught with challenges, the historical significance and potential value of this transformation cannot be overlooked.