Although it faced a slight pullback after the initial news of increasing US involvement in the Middle East, Bitcoin has since managed to bounce back. Unfortunately, the same cannot really be said for altcoins.
How Tensions in the Middle East Can Affect Bitcoin’s Price
As geopolitical tensions rise, financial markets get nervous, and crypto is no exception. Last week, growing fears of US military action against Iran and ongoing conflict involving Israel sparked a sharp risk-off move.Â
Most altcoins took a hit: Ethereum slipped 0.7%, Solana, XRP, and Cardano dropped over 1%, and Dogecoin sank more than 3%. Yet amid the uncertainty, Bitcoin told a more complex story.
Bitcoin initially dropped from above $102,000 to around $98,200—the lowest level since early May—after reports of Israeli strikes on Iranian nuclear facilities surfaced. It briefly lost nearly 4% before rebounding just as quickly, climbing back over $100,000 within hours. That resilience has sparked renewed debate about Bitcoin’s role as a hedge in times of geopolitical crisis.
Bitcoin’s bounce wasn’t random. Spot Bitcoin ETFs saw $389 million in net inflows over the week compared to just $19 million for Ether ETFs. That’s not just a preference for Bitcoin; it’s a signal that investors are seeking relative safety even within crypto.
This flight to perceived quality isn’t new. When Iran launched missiles at US bases in Iraq in early 2020, Bitcoin spiked nearly 15% in three days. In 2022, following Russia’s invasion of Ukraine, Bitcoin dipped initially but recovered quickly as sanctions upended global financial systems and currency risk surged. The logic is simple: when traditional markets grow more unpredictable, Bitcoin’s decentralized nature can look attractive, even if it’s volatile.
But the distinction now is that Bitcoin is more institutionally embedded. MicroStrategy’s Michael Saylor recently reiterated his commitment to long-term accumulation, predicting a future price of $10 million per coin over the coming decades. And Texas just made headlines by becoming the first US state to purchase Bitcoin with public funds, further cementing its legitimacy as a strategic asset.
Why It Matters Now
Investors aren’t just reacting to war headlines. They’re also parsing the Fed’s stance. With interest rates on hold but inflation still looming, the appetite for alternatives is rising. That backdrop adds weight to every geopolitical tremor.
Still, the risk is twofold: if Middle East tensions escalate into broader conflict or disrupt oil markets significantly, Bitcoin could face renewed volatility, especially if broader risk assets enter a deeper selloff. At the same time, those very shocks could reinforce the digital gold narrative, particularly if traditional safe havens fail to deliver.
Looking Ahead
Right now, Bitcoin appears to be holding $100,000 as a key psychological level. If tensions ease, we could see renewed appetite for risk and possibly fresh highs. If they worsen, Bitcoin’s next test will be whether it continues to attract inflows as a safe-haven asset, or whether it succumbs to a broader market retreat.
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Major Altcoins In Shambles: What Happened?
Bitcoin may have bounced back, but the same can’t be said for the rest of the crypto market. As geopolitical fears rattled investors, altcoins were hit hard—and they haven’t recovered as quickly. While Bitcoin saw inflows and held key levels, Ethereum, XRP, Solana, and others struggled with their own problems, adding fuel to the sell-off.
XRP was rattled by legal uncertainty. Rumors about the US government considering seizure of Ripple’s escrowed tokens created panic. The ongoing court silence around Ripple’s settlement with the SEC chalked up even more tension. Large holders (likely early investors) appeared to be offloading millions in tokens daily, which worsened the mood.
Ethereum, however, actually fell more in the past week than XRP. It took the brunt of the risk-off move, leading with higher losses and liquidations among major cryptos . Retail holders have been selling in a hurry, even though on-chain data suggests institutions are buying the dip. It’s forming higher lows but remains stuck under resistance. If ETH doesn’t clear that level soon, the risk of another drop is real.
Solana and Cardano are also struggling. Solana broke a bearish chart pattern, confirming its weaker setup. Cardano’s bounces have been soft, with low conviction and fading interest. Bitcoin is being treated as the safety asset in crypto this week, while altcoins are bearing the brunt.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
