The Impact of Geopolitical Conflicts on the Bitcoin Market: Analysis of Price Trajectories Over the Past Five Years

In recent years, geopolitical conflicts that have erupted in various parts of the world have had a significant impact on the Bitcoin market. This article will delve into the influence of major war conflicts on Bitcoin price trends between 2020 and 2025, as well as the recovery trajectory of the cryptocurrency market post-war.

Russia-Ukraine Conflict: Watershed Moment

Market fluctuations in the early stages of the war

On February 24, 2022, the Russia-Ukraine conflict fully erupted, and the price of Bitcoin soared by 20% in a short period, briefly surpassing $45,000. However, in the long term, the war pushed up energy prices, and the Federal Reserve was forced to raise interest rates significantly, leading to a substantial decline of 65% for Bitcoin in 2022. Although the decline cannot be entirely attributed to the war, geopolitical uncertainty undoubtedly exacerbated market pessimism.

Interestingly, the ongoing war has provided new narrative support for Bitcoin. The Ukrainian government has raised a substantial amount of donations through cryptocurrency, highlighting the unique value of digital currency in situations where traditional finance is restricted. At the same time, Russia has also utilized cryptocurrency to some extent to evade sanctions, further reinforcing Bitcoin's position as an alternative financial tool.

It is worth noting that compared to the long bear market that Bitcoin experienced after Russia's invasion of Ukraine in 2014, by 2022, Bitcoin had developed into a larger, stronger asset class that was more accepted by institutional investors.

Israel-Gaza Conflict: A Test of Market Resilience

Short-term Impact and Rapid Recovery

On October 7, 2023, the Israel-Gaza conflict broke out. On October 11, Bitcoin briefly fell below $27,000, hitting a new low since September. However, since then, the prices of digital assets have not shown significant fluctuations, reflecting a reduced sensitivity of the cryptocurrency market to geopolitical events.

During the conflict, the transfer volume of stablecoins increased significantly, indicating that they are becoming a new infrastructure. Overall, the cryptocurrency market has shown strong resilience.

Iran-Israel Conflict: The Role of Institutions as a Buffer Becomes Prominent

In April 2024, the conflict between Iran and Israel broke out, with Bitcoin's volatility at only ±3%, far lower than the levels observed during the Russia-Ukraine war in 2022. The participation of institutional investors has somewhat alleviated market fluctuations.

After Israel launched an airstrike on Iran in June 2025, Bitcoin fell 4.5% to $104,343 within 24 hours, and Ethereum dropped 8.2% to $2,552. Given the severity of the event, this decline is still within a controllable range, demonstrating strong resilience.

However, the geopolitical risk index is on the rise, reaching a high of around 158. This indicates that the downside risks to the global economy are increasing.

Key Moments in Observing Capital Logic

The signing of a ceasefire agreement is often the best window to observe capital logic. After the end of the Nagorno-Karabakh war in November 2020, Bitcoin nearly doubled in 30 days. During the Russia-Ukraine negotiations in March 2022, the Federal Reserve's interest rate hike expectations hit market confidence, causing Bitcoin to drop by 12%.

On the day of the temporary ceasefire between Israel and Palestine in November 2023, the cryptocurrency derivatives market experienced a massive liquidation. The demand in war-torn areas gradually subsided, and the market quickly shifted its focus to ETF approvals, halving cycles, and other native narratives.

After Israel and Hamas reached a ceasefire agreement on January 15, 2025, Bitcoin once again broke through $100,000. However, the performance during the Middle East conflict also prompted people to re-evaluate the safe-haven properties of Bitcoin.

Entering the Institutional Era

The war value of digital assets is being scenically reconstructed. The cryptocurrency donations received by the Ukrainian government account for 6.5% of early international aid; the underground network in Gaza uses Bitcoin mining machines to maintain communication; Iranian oil merchants are breaking sanctions through mixers, etc. These applications in the margins are forming a unique ecosystem.

The current cryptocurrency market has formed a clear war response mechanism, including indicators such as crude oil prices, the VIX fear index, and open interest. However, the proportion of risk-averse funds flowing into the cryptocurrency space from geopolitical conflicts is less than 5%, and this number may shrink further in the ETF era.

The real turning point lies in monetary policy. When the Federal Reserve opens the rate cut channel, the signing of a ceasefire agreement may become an accelerator for capital inflow. However, if the war leads to a disruption in the energy supply chain, even if the fighting subsides, the risk of stagflation will still suppress the crypto market. Therefore, closely monitoring the Federal Reserve's interest rate policy remains crucial.

Post-war Recovery Model of the Cryptocurrency Market

From the perspective of past conflicts, the advancement of the peace process typically reduces geopolitical risk premium, enhances investors' risk appetite, and is beneficial for the performance of risk assets such as Bitcoin.

If Bitcoin demonstrates good risk resistance during wartime, institutional investors may increase its weight in their portfolios. From recent performance, Bitcoin's relative stability during geopolitical crises may enhance its status in the eyes of institutional investors.

Conclusion

Looking to the future, with technological advancements and regulatory improvements, cryptocurrencies such as Bitcoin are expected to play a more important role in the global financial system. Although they still face various challenges and fluctuations in the short term, their status as important financial tools in the digital age has been initially established.

In this era full of uncertainty, digital assets are redefining our understanding of currency, value storage, and financial systems. Despite the challenges ahead, the historical significance and potential value of this transformation cannot be ignored.