War and Bitcoin: A Five-Year Price Trajectory Depth Analysis

In recent years, the global geopolitical situation has been turbulent, with several major conflicts erupting one after another. From 2020 to 2025, we have witnessed Bitcoin's sensitive response to these events. This article will delve into the impact of major wars and conflicts on Bitcoin's price trends over the past five years, as well as the recovery trajectory of the crypto market after the conflicts end.

Russia-Ukraine Conflict: A Watershed Moment

Market fluctuations at the beginning of the war

On February 24, 2022, the Russia-Ukraine conflict fully erupted. Speculation arose that Russian funds might flow into Bitcoin and other cryptocurrencies, driving the price of Bitcoin up by 20%, briefly surpassing $45,000. This seems to confirm the value of cryptocurrencies during times of crisis.

However, in the long run, the war has driven up natural gas prices in Europe, and the Federal Reserve has been forced to aggressively raise interest rates, leading to a 65% crash in Bitcoin in 2022. Although the decline cannot be entirely attributed to the war, the geopolitical uncertainty has undoubtedly exacerbated market pessimism.

Interestingly, the persistence of war has instead provided new narrative support for Bitcoin. The Ukrainian government has raised a significant amount of donations through cryptocurrency, highlighting the unique value of digital currency in the face of restrictions in the traditional financial system. At the same time, in response to Western sanctions, Russia has turned to cryptocurrency to some extent, further reinforcing Bitcoin's status as an alternative financial tool.

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

Israel-Gaza Conflict: Market Test

Short-term Impact and Rapid Recovery

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

However, since the conflict began, the prices of digital assets have not shown significant fluctuations. This relative stability reflects a reduced sensitivity of the cryptocurrency market to geopolitical events.

Iran-Israel Conflict

In April 2024, the Iran-Israel conflict broke out, and 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. A certain ETF saw a net inflow of $420 million in a single day, forming a volatility buffer. The average daily trading volume of the spot ETF accounted for 55%, and the war sentiment was diluted by institutional order flows.

After Israel launched an airstrike against Iran in June 2025, Bitcoin fell by 4.5% to $104,343 within 24 hours, and Ethereum dropped by 8.2% to $2,552. This decline is still manageable relative to the severity of the event, demonstrating strong resilience.

However, the geopolitical risk ( GPR ) index shows an upward trend, around 158. The previous time point exceeding 150 was at the beginning of 2024. The higher the GPR index, the lower the investment, stock prices, and employment rate, and the greater the probability of economic disaster, thus increasing the downside risk of the global economy.

Observation Window of Capital Logic

The moment a ceasefire agreement is signed often serves as the best window to observe capital logic. In November 2020, after the conclusion of the Nagorno-Karabakh war, Bitcoin nearly doubled in the following 30 days. The reason this territorial dispute in the Caucasus ignited the crypto market lies in the fact that the war did not change the global easing tone, as the Federal Reserve's monthly $120 billion bond purchase program continued to nourish risk assets.

In contrast, the negotiations between Russia and Ukraine in March 2022 saw a brief hope for a ceasefire shattered by the Federal Reserve's announcement of a 50 basis point interest rate hike, 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 liquidations of $210 million. The BTC to Egyptian pound exchange rate premium on the Egyptian OTC market dropped from 8.2% to 2.1%, indicating a gradual retreat of demand in war-torn areas. The narrative of war was soon overshadowed by native narratives such as ETF approvals and the halving cycle.

On January 15, 2025, Israel and Hamas agreed to a ceasefire and a proposal for prisoner exchange. Subsequently, Bitcoin surged sharply, breaking through $100,000 again before falling. The market performance during the Middle East conflict prompted a reassessment of Bitcoin's safe-haven asset properties---Bitcoin and Ethereum still cannot be considered safe-haven assets in the gold market.

Entering the Institutional Era

The value of digital assets in warfare has not disappeared; rather, it is being reconstructed in contextual scenarios. The Ukrainian government has 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 circumvent sanctions... These real applications in the margins are forming a parallel underground ecosystem that does not contradict 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: oil prices trigger inflation alerts, the VIX panic index, and open interest, among others. Data shows that less than 5% of the safe-haven funds released by geopolitical conflicts eventually flow into the cryptocurrency space, and this number may shrink further in the era of ETFs.

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 inflows. On June 18, 2025, U.S. interest rate futures prices reflected a 71% probability of a Fed rate cut 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 triggers a breakdown in the energy supply chain, even if the fighting subsides, the shadow of stagflation will still suppress the cryptocurrency market. Monitoring the Federal Reserve's interest rates remains a top priority.

Post-war Cryptocurrency Market Recovery Model

From the perspective of past conflicts, the end of war usually leads to a gradual recovery of market confidence. For the Bitcoin market, the advancement of the peace process typically reduces the geopolitical risk premium, making investors more willing to take on risks. This rebound in 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 status 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 important role in the global financial system. Although they may still face various challenges and fluctuations in the short term, their status as important financial tools in the digital age has already been preliminarily 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 filled with challenges, the historical significance and potential value of this transformation cannot be ignored.