The global crypto market slid sharply on Friday after Israel launched a large-scale airstrike on Iran, targeting key military and nuclear sites. The move, part of “Operation Rising Lion,” immediately spooked global investors and sent risky assets tumbling — including cryptocurrencies.
Bitcoin fell more than 5% to $102,900 within hours of the first reports out of Tehran. Ethereum dropped 9.6% to $2,493. Other major altcoins like Solana, XRP, and Dogecoin also recorded losses between 5% and 10%.
So, why did war in the Middle East drag crypto down? The answer lies in how financial markets respond to conflict.
Why Israel-Iran War Made Crypto Fall
When war breaks out or geopolitical risks rise, investors typically shift their money out of volatile “risk assets” and into traditional “safe havens” like gold and U.S. government bonds. This risk-off move shows widespread fear and a desire for capital protection.
“Crypto is reacting negatively to news of Israel strikes in Iran, in line with major risk assets,” said Caroline Mauron, co-founder of Orbit Markets. Bitcoin dropped because traders rushed to safer assets like gold, which surged past $3,429 — a new high — after the airstrikes.
Unlike gold, which has a long-standing reputation as a store of value in times of crisis, Bitcoin is still widely perceived as speculative. As tensions rise, traders seek liquidity and move out of volatile positions, which explains the immediate downturn.
Massive Liquidations Deepen the Crash
The sudden drop in crypto market wasn’t just about investor sentiment. It triggered forced liquidations, particularly among traders who had placed leveraged bets on Bitcoin’s continued rise.
Data from Coinglass showed over $1.15 billion in positions were wiped out in 24 hours — with long positions accounting for $937 million of that total. Bitcoin alone saw $427.75 million in long liquidations. Ethereum followed with over $244 million in losses.
More than 247,000 traders were liquidated across the market, as Bitcoin tumbled from $108,000 earlier in the week to below $103,000.
Israel’s strike came just hours after the IAEA censured Iran for nuclear non-cooperation. Iran responded by accelerating uranium enrichment and threatening retaliation. Key Iranian military figures were reportedly killed in the attack, including IRGC commander Hossein Salami and nuclear scientist Fereydoon Abbasi, according to state media.
In response, Iran has appointed new military leadership and vowed to retaliate. Israel remains in a state of emergency, having closed schools and mobilized tens of thousands of troops.
The conflict has triggered a broad market sell-off: Dow Jones and Nasdaq futures fell over 1%, oil jumped more than 9%, and the U.S. State Department warned Americans to leave Iraq.
Bitcoin’s Safe-Haven Status Questioned
Is Bitcoin digital gold, or just another risky tech asset?
Economist Peter Schiff was blunt, saying:
Bitcoin’s failure to rise against gold — despite years of hype, ETFs, and institutional buying — shows the bubble has peaked.
Others shared the same view, pointing out Bitcoin’s correlation with stocks during market shocks.
However, crypto advocates pointed to previous events. When Iran launched over 300 missiles at Israel in April, Bitcoin initially fell but later outperformed both gold and oil within 48 hours. Anthony Pompliano noted that “it will be interesting to see if BTC behaves the same way here.”
A recent BlackRock report supports this possibility. It found that Bitcoin often drops during geopolitical shocks but rebounds significantly — often gaining double digits within 60 days, outperforming traditional safe havens.
The crypto market’s fragility wasn’t only due to war. Earlier this week, the U.S. Consumer Price Index showed cooling inflation for May. That triggered profit-taking among crypto traders who had seen gains from Bitcoin’s recent run to $111,000.
Now, oil’s sharp rise raises inflation risks again, and markets worry that the U.S. Federal Reserve could delay planned rate cuts. That’s another reason investors are avoiding high-risk assets like cryptocurrencies.
At press time, Bitcoin was trading at $103,100, still holding some gains for the week but far below its recent high. Ethereum remained under pressure, trading below $2,500. The total crypto market cap has fallen over 6.6%, now at $3.32 trillion.
