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Bitcoin fell sharply during the initial Middle East escalation but recovered quickly due to ETF support.
BTC’s role as a “digital gold” remains questionable amid rising global tensions.
Future price trends hinge on whether the conflict escalates or stabilizes.
The recent escalation between Israel and Iran has tested global markets, and Bitcoin is no exception. Often labeled “digital gold,” Bitcoin's performance has been mixed amid the conflict. Read on to know how the ongoing tensions could impact Bitcoin’s price, examining why the cryptocurrency has not yet served as a traditional haven, and considering scenarios that may alter its trajectory.
Following Israeli airstrikes on Iranian nuclear and military targets, Bitcoin fell sharply below $103,000 on 13th June, 2025, its largest single-day drop in over a month. Other cryptocurrencies like Ethereum, Solana, and XRP mirrored the decline, wiping out billions from the broader crypto market cap.
This immediate selloff aligned cryptocurrency with broader risk assets, such as equities, as investors fled to traditional havens like gold and the U.S. dollar. While gold surged to new all-time highs, Bitcoin struggled to hold its footing, highlighting a clear deviation from the “digital gold” narrative.
However, by June 16, BTC rebounded to the $106 - $107k range as equity futures recovered and traders regained confidence
Bitcoin’s inability to behave like a safe-haven asset during this crisis was underscored by analysts at The Wall Street Journal, who noted that when gold reached new highs, Bitcoin lagged, falling nearly 1.6% on the day of the Israel-Iran strikes, even more than the S&P 500.
This contradicts the notion of Bitcoin as a universal crisis hedge. Analysts suggest that BTC’s digital nature and speculative trend skew its role, treating it more like a high-beta asset correlated with equities.
Despite the selloff, Bitcoin recovered swiftly, trading back above $107,000 within two days. Analysts attribute this resilience to strong institutional support, especially from U.S. spot Bitcoin ETFs. According to data from BitMEX, ETF inflows crossed $1.3 billion in the past week alone.
Technical indicators, such as the stochastic oscillator and RSI charts, suggest that Bitcoin has established strong support at $105K. This rebound suggests that while short-term traders may react to headlines, long-term investors are buying the dips
If tensions between Iran and Israel escalate, particularly if the conflict spreads into a broader regional war, the global economic impact could be severe. Oil prices would spike, inflationary pressures would rise, and risk sentiment would deteriorate.
In this environment, Bitcoin could fall back toward the $95,000 - $100,000 range, mirroring broader declines in speculative assets. The dollar's strength and rising Treasury yields could further suppress crypto inflows.
On the other hand, if diplomacy prevails or military actions remain limited, markets could shift back to a risk-on posture. In this environment, with equities recovering and ETF inflows continuing, Bitcoin could aim for $112,000 - $115,000, or potentially push beyond $120,000.
This outcome is supported by rising on-chain activity, increasing wallet creation, and resilience in Ethereum and DeFi-linked altcoins.
Geopolitical tensions historically increase Bitcoin trading volumes, particularly in developing markets, according to a research paper on Bitcoin’s volatility. Yet price action depends heavily on market sentiment and institutional positioning.
While crises increase Bitcoin’s media exposure and transaction activity, they do not yet guarantee an upward price movement. The disconnect between activity and price highlights Bitcoin's dual nature as both a technological innovation and a financial instrument that is still evolving.
Also Read: Bitcoin Price Eyes $108K as BlackRock Fuels Fresh Momentum
Investors should also monitor related macro variables:
Oil Prices: Brent crude jumped over 10% after the strikes. Prolonged oil shocks increase inflation and shift capital to hard assets, such as gold, rather than crypto.
U.S. Dollar Index (DXY): A rising dollar generally hurts Bitcoin by reducing global risk appetite.
Volatility Index (VIX): As the “fear gauge” spikes, traders may exit volatile assets like crypto in favor of cash or bonds.
Bitcoin’s reaction to the Middle East conflict has underscored its vulnerability to macroeconomic and geopolitical shocks. While it didn’t act as a traditional hedge, it displayed surprising resilience, supported by ETF inflows and institutional buying.
In the near term, Bitcoin’s path will be shaped by geopolitical developments, risk sentiment, and technical thresholds, such as the $105K support level and the $112K resistance level. While Bitcoin may not yet be “digital gold,” it remains a dynamic asset that reflects both investor psychology and global uncertainty.
Also Read: Metaplanet’s Bitcoin Treasury Hits 10,000 BTC, Stock Rallies 20%
