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, leaving the crypto market to bear an 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 value. The Crypto Fear & Greed Index immediately fell into the “Extreme Fear” zone.

Tokenize Capital Managing Partner Hayden Hughes 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 crypto market participants, 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 forecasts related to the current US-Israel-Iran war, attempting to analyze 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 approximately $160 billion within 24 hours. Stock markets also plummeted, 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, showing a clear upward trend in Bitcoin demand. Analysts partly attributed this surge to Russians attempting to use crypto assets to evade sanctions, and the demand from Ukrainians and Russians 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 and store-of-value asset.

But this property did not last; in the following months, the Federal Reserve sharply raised interest rates, and the macro environment reversed sharply. From the collapse of Terra to the FTX crash, 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 started.

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 fell 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 shows surprising indifference. Four days after the outbreak, Bitcoin dropped below $27,000, hitting a new low since September, which traders largely attributed to the negative impact of Middle East conflict on investor sentiment. But 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, as the war narrative was quickly overshadowed by the approval of ETFs and the halving cycle—native crypto narratives. 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 Bitcoin spot ETFs 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. In other words, 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. Regional wars, even brutal ones, 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 within Pakistan with missile strikes, marking the most intense direct military conflict 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 immediately, with Bitcoin rising above $103,000. The market quickly returned to normal trading, and the impact of this conflict was so weak that it’s 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 period in Bitcoin’s history that is quite fragile.

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 ETFs experienced about $3.8 billion in net outflows for the month—the worst monthly performance since the launch of spot ETFs—and cumulative net outflows since the start of the year reached $4.5 billion. Meanwhile, gold ETFs absorbed 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 of early 2026.

On the day the war broke out, 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 5% daily gains—the first Friday increase since the outbreak of the Iran war. 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 low at the start of the conflict.

Similar to the past, but with more variables

This trend closely resembles the “script” of previous conflicts—sharp decline, rebound, digestion. If the script is exactly the same, then we are likely in the phase of digestion now.

Looking back at the three conflicts over the past four years, one clear conclusion is that geopolitical events themselves are increasingly difficult to leave a lasting mark 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 prove that regional military conflicts, even brutal ones, will only cause short-term turbulence unless they substantially disrupt energy supplies or global monetary policy. After brief shocks, the crypto market tends to quickly revert to its own narrative.

Whether the current US-Israel-Iran conflict is an exception depends mainly 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 completely dashed, and the macro pressure on risk assets like Bitcoin will far exceed 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.