Under the flames of war, how does Bitcoin fluctuate? Five years of data tell you the answer.

Original Title: How War Affects Bitcoin? In-Depth Analysis of Price Trajectory Over Five Years

In the early hours of June 13, 2025, Israel launched Operation Lion Rising, attacking several Iranian cities, military bases, and nuclear facilities. Recently, Nobitex, Iran's largest crypto exchange, was attacked by Israeli hackers, causing tens of millions of dollars in stablecoin losses. Bitcoin quietly fluctuated in the smoke of gunfire, rising all the way to nearly $110,000 before falling again. From a number of major wars and conflicts that took place between 2020 and 2025, we can observe the sensitive reaction of the Bitcoin price to geopolitical events. This article will provide an in-depth analysis of the impact of major wars and conflicts on Bitcoin's price movements over the past five years, as well as the recovery trajectory of the crypto market after past wars.

The watershed moment of the Russia-Ukraine conflict

Market fluctuations at the beginning of the war

The Russia-Ukraine conflict broke out in full on February 24, 2022, and there was speculation that Russian funds would flow into cryptocurrencies such as Bitcoin, causing the price of Bitcoin to soar by 20%, briefly surpassing $45,000. At the same time, Russian oligarchs attempted to shift frozen assets through Bitcoin, seemingly confirming the "crisis value" of cryptocurrencies.

However, in the long run, when the war pushed European natural gas prices to historic peaks, the Federal Reserve was forced to initiate the most aggressive interest rate hikes in forty years, leading to a 65% crash in Bitcoin in 2022. Although this decline cannot be entirely attributed to the war, geopolitical uncertainty has undoubtedly exacerbated the market's pessimistic sentiment.

Data source: bitscrunch.com

Interestingly, the ongoing conflict has provided new narrative support for Bitcoin. The Ukrainian government has raised millions of dollars in donations through cryptocurrency, highlighting the unique value of digital currencies in the face of restrictions in the traditional financial system. At the same time, in response to Western sanctions, Russia has also turned to cryptocurrency to some extent as a tool to evade sanctions, further reinforcing Bitcoin's status as an alternative financial instrument.

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

Israel War Market Test

Short-term Impact and Rapid Recovery

On October 7, 2023, the Israel-Gaza conflict broke out. On October 11, according to bitsCrunch data, Bitcoin fell below $27,000, hitting a new low since September, and traders generally attributed this to the negative impact of the Middle East conflict on investor sentiment. During the 2023 Gaza conflict, the weekly transfer volume of USDT increased by 440%, and stablecoins are becoming the new infrastructure.

Since the start of the Israel-Hamas conflict, the prices of digital assets have not shown significant fluctuations. This relative stability reflects a decreased sensitivity of the cryptocurrency market to geopolitical events.

Iran Israel conflict

In April 2024, under the Iran-Israel conflict, on the day of the missile attack, Bitcoin's volatility was only ±3%, less than 1/3 of that during the Russia-Ukraine war in 2022. BlackRock's ETF had 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%, and the war sentiment was diluted by institutional order flow.

According to bitsCrunch data, even amidst major geopolitical events such as Israel's airstrikes on Iran, the Bitcoin market has not entered a panic mode. Although Bitcoin fell by 4.5% to $104,343 within the first 24 hours of the war's onset in June 2025, and Ethereum dropped by 8.2% to $2,552, this decline remains manageable in relation to the severity of the events, demonstrating strong resilience.

However, according to the Geopolitical Risk (GPR) Index, we find that for now, the index is trending upwards, around 158. The previous time node of more than 150 was at the beginning of 2024. This index was constructed by Dario Caldara and Matteo Iacoviello. The Geopolitical Risk (GPR) Index peaked around the interwar period, in the early days of the Korean War, during the Cuban Missile Crisis, and after 9/11. The higher the geopolitical risk, the lower the investment, share price, and employment rate. The higher the geopolitical risk, the higher the probability of economic catastrophe and the greater the downside risk to the global economy.

Data source: bitscrunch.com

The best window to observe capital logic

The moment when a ceasefire agreement is signed is often the best window to observe the logic of capital. When the Nagorno-Karabakh War ended in November 2020, Bitcoin nearly doubled in the next 30 days. The core reason why this territorial dispute in the small Caucasian country has exploded the crypto market is that the war has not changed the tone of global easing, and the Federal Reserve's $120 billion monthly bond purchase program continues to irrigate risk assets. This is mirrored by the March 2022 Russia-Ukraine negotiations, where hopes for a brief ceasefire were shattered by the Fed's 50 basis point rate hike, and Bitcoin fell 12% in response.

Data source: bitscrunch.com

On the day of the temporary ceasefire between Palestine and Israel in November 2023, the crypto derivatives market blew up $210 million. The exchange rate premium of BTC against the Egyptian pound on the OTC exchange fell from 8.2% to 2.1%, and demand in war-torn areas gradually ebbed. The war narrative was quickly overshadowed by the original narrative of ETF approvals and halving cycles. On January 15, 2025, Israel and Hamas agreed to a truce and a proposal for a prisoner exchange. Bitcoin then rose in a straight line, breaking through $100,000 again and then falling. The performance of the market during the conflict in the Middle East has prompted a re-examination of Bitcoin's safe-haven attributes – Bitcoin and Ethereum cannot yet be considered safe havens in the gold market.

Entering the institutional era

The war value of digital assets has not disappeared but has been reconstructed in scenarios. The Ukrainian government received $127 million in crypto donations, accounting for 6.5% of its early international aid; the underground network in Gaza maintains its communication network through Bitcoin mining machines; Iranian oil merchants use mixers to break through sanctions… These real applications in marginal areas are forming an underground ecology that runs parallel to Wall Street. While the mainstream market focuses on ETF fund flows, the demand for cryptocurrencies in war-torn regions has become a new indicator for observing digital assets.

The current cryptocurrency market has formed a clear war response mechanism: crude oil prices trigger inflation alarms, the VIX panic index, and open interest on Deribit, among others. According to bitsCrunch data, less than 5% of the safe-haven funds released from geopolitical conflicts ultimately flow into the cryptocurrency sector, and this number may shrink further in the ETF era.

The real turning point lies in monetary policy. When the Federal Reserve opens the interest rate cut channel, the signing of a ceasefire agreement will become an accelerator for capital inflow. On June 18, 2025, U.S. interest rate futures prices reflect a 71% probability of the Federal Reserve cutting rates in September, up from 60% before the statement was released, indicating a slight increase in the probability of a rate cut in September. However, if the war causes a disruption in the energy supply chain, even if the conflict subsides, the shadow of stagflation will still suppress the cryptocurrency market. Paying attention to Federal Reserve interest rates remains a top priority.

Recovery patterns in the post-war crypto market

From the perspective of concluded conflicts, the end of wars usually brings about a gradual restoration of market confidence. For the Bitcoin market, the advancement of peace processes typically reduces geopolitical risk premiums, making investors more willing to take on risks. This resurgence of risk appetite often benefits the price performance of risk assets such as Bitcoin.

If Bitcoin demonstrates good risk resistance during wartime, institutional investors may increase its weight in their portfolios. Conversely, if it performs poorly, it may face pressure from capital outflows. From recent performance, Bitcoin's relative stability during geopolitical crises may enhance its position in the eyes of institutional investors.

Conclusion

Looking to the future, with continuous technological advancements and the gradual improvement of regulatory frameworks, cryptocurrencies such as Bitcoin are expected to play a more significant role in the global financial system. Although various challenges and fluctuations may still be faced in the short term, its position as an important financial tool in the digital age has already been initially established.

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