The escalation of Middle East chaos and the triple undercurrents behind crypto market turbulence

This weekend, the situation in the Middle East once again delivered a "shockwave" to global markets—U.S.-Israeli joint forces precisely targeted Iranian factories and steel plants, Houthi forces launched missiles at Israel to open a second front, and countries like Saudi Arabia publicly expressed opposition to Iran's sovereignty claims in the Strait of Hormuz, clearly opposing any actions that could escalate tensions. What worries the market even more is that U.S. Marine Corps units have already been deployed in the relevant waters, with plans to seize islands reportedly awaiting Trump's approval. Market forecasts suggest a greater than 50% probability of this operation being carried out, and the global asset pricing logic is being reshaped by this geopolitical conflict.

The complex game of religious factions is at the core of why this conflict cannot be quickly resolved. Despite both Houthi forces and Iran being Shia, they belong to different branches; although strategic allies, Iran has limited command over them. Hezbollah in Lebanon is fully loyal to Iran’s Supreme Leader, effectively acting as Iran’s "proxy" in Lebanon. This transnational loyalty creates a political ecosystem that puts Lebanon’s government in a dilemma—officials seek to ease relations with Israel, but the one-third of the population that is Shia insists on following Iran’s interests. The lack of internal consensus makes regional developments even harder to predict.

Looking deeper into history, the chaos in the Middle East is always intertwined with the "imperial legacy" curse. The historical glories of Persia, Arab empires, and the Ottoman Empire have fostered ambitions of regional dominance among current nations. Religion has become the most effective tool for expansion, and Iran is merely the latest "aspirant." The good news is that Thailand has reached an agreement with Iran, paying $2 million in transit fees, temporarily restoring shipping through the Strait of Hormuz. The bad news is that, amid multiple power plays, the trend toward prolonged conflict is clear, and the impact on the global economy will continue to ferment.

Domestic anti-war sentiments in the U.S. are also adding variables to the situation. Seven million people have protested against Trump’s Iran policy, mainly opposing escalation of the conflict. Republican Congressman Vance even stated that U.S. troops should withdraw in the short term, hinting that ground forces will not be deployed. This scene recalls the end of the Vietnam War, and U.S. strategic retrenchment could become a key factor influencing the conflict’s trajectory.

Market reactions on Friday evening were intriguing: crude oil prices surged due to supply concerns, and gold also strengthened simultaneously. Behind this "double rise" is a concentrated release of global risk-averse sentiment. For the crypto world, the impact of this conflict is far more complex than it appears, transmitted through three hidden channels.

First hidden channel: Expectations of liquidity tightening intensify. Turmoil in the Middle East pushes up energy prices, potentially forcing the Federal Reserve to maintain high interest rates to curb inflation. Global liquidity will tighten, directly suppressing risk asset valuations, with cryptocurrencies like Bitcoin being the first to feel the effect.

Second hidden channel: Divergence in safe-haven demand. When gold’s traditional safe-haven qualities become prominent, some funds will flow from cryptocurrencies into gold. However, at the same time, some investors in the Middle East may choose Bitcoin as a "store of value" to hedge against local currency devaluation and asset freezes, creating a two-way flow of capital.

Third hidden channel: Rising infrastructure risks. The Middle East is a key region for global crypto mining and node distribution. If the conflict escalates further, it could impact local hash rate supply and network stability, even causing regional service disruptions on some trading platforms.

For crypto investors, the most rational strategy now is to control positions, reduce leverage, and closely monitor U.S. military actions and Iran’s retaliatory measures—these two variables will directly determine short-term market volatility. Additionally, keep an eye on cryptocurrencies like ETH, which are less correlated with global liquidity, as their resilience may become more apparent amid turbulence. Remember, in the face of geopolitical conflict, "survival" is always more important than "quick profits."