Will the crypto market continue to affect the BTC market when the conflict between Iraq and Israel have collapsed?

Deng Tong, Golden Finance

On June 13, 2025, Israel launched a preemptive strike against Iran. Israeli Defense Minister Katz officially announced that he would continue to attack Iran: after Israel launches an attack on Iran, missiles and drones are expected to be targeted at Israel and its civilians in the near future.

A man walked past the scene of a damaged residential area in northern Tehran on Friday.

Affected by this news, the crypto market fell sharply, with BTC falling to $103,081 at the lowest point, down 6.4% from the high of more than $110,000 on June 10. As of press time, it was $104,175, a day decline of 3.3%. ETH was $2516.77, down 8.6% intraday.

But in fact, Trump had already warned of the conflict between Iran yesterday: Trump said (asked about Iran) that American personnel are evacuating (Middle East). This can be a dangerous place. (About Iran's tensions) We will wait and see. They can't have nuclear weapons, it's very simple.

Trump's warning put pressure on the crypto market yesterday, so today's big drop is actually just a continuation of yesterday's decline.

Why is the relationship between Iran and Iran so complicated? What is the cause of this round of conflict? Will the conflict continue? How much impact will it have on the crypto market?

1. Review of modern Iranian relations

Pahlavi Dynasty: From prosperity to decline

During the Pahlavi dynasty in Iran (1925-1979), Iran-Israeli relations experienced a transition from prosperity to decline.

After the first Arab-Israel War broke out in 1948, Israel successfully occupied more territory than the United Nations planned to approve it. Iran, under the rule of Shah Mohammed Reza Pahlavi, the second king of the Pahlavi dynasty, became the second country after Turkey to formally recognize Israel with Muslims as the main body.

When Mohamed Mosatai became Iran's prime minister in 1951, Mosatai cut off Iran's ties with Israel - a relationship he believes is in the interests of the West in the region.

Things changed dramatically when a coup organized by British and American intelligence agencies overthrew the Mosatai government in 1953. The coup restored Shah's rule and Iran became a staunch ally of the West in the region.

Israel established a de facto embassy in Tehran, and the two sides eventually sent ambassadors to each other in the 1970s. As bilateral trade relations continue to develop, Iran soon became Israel's major oil supplier, and the two countries also established a pipeline to transport Iranian oil to Israel and then to Europe.

Tehran and Tel Aviv also conducted extensive military and security cooperation.

Iran Islamic Republic: Iran-Israel relations continue to be cold

In 1979, Shah was overthrown and the Islamic Republic of Iran was born.

After Iranian revolutionary leader Ayatollah Khomeini came to power, Iran cut off all its ties with Israel; citizens could no longer travel to Israel, flight routes were cancelled, and the Israeli embassy in Tehran was converted into a Palestinian embassy.

"To overcome the differences between the Arabs and Persians, and between Sunnis and Shiites, Iran has taken a more radical stance on the Palestinian issue to show off its leadership in the Islamic world and to put the Arab regime allied with the United States on the defensive," said Quincy's executive vice president, Trita Palsi, noted.

This laid the groundwork for Yi Yi's worsening relationship since then.

2. What is the origin of this conflict?

Israel named its operation against Iran "Strength of a Lion." Israel said Iran has enough enriched uranium to create multiple bombs within a few days, so action needs to be taken to deal with this "imminent threat."

Netanyahu said the “power of the lion” attacked Iran’s main uranium enrichment facility in Natanz, nuclear scientists and what he called “the core of Iran’s ballistic missile program.” Six nuclear scientists were killed in the attack, according to Iran's national news agency Tasnim.

According to Southern Daily , an interview with Sun Degang, director of the Middle East Research Center of Fudan University, interviewed by Southern Daily: " Israel has long had plans to strike Iran. The reason for attacking Iran may be directly related to the Iran nuclear agreement. Israel may be worried that once the United States and Iran reach a nuclear agreement, Iran will become a country with de facto nuclear capabilities, especially worried that Iran has high concentrations of nuclear materials that can create nuclear bombs. Israel does not allow Iran to challenge the regional "nuclear monopoly" status. Therefore, Israel may want to seize this "window of opportunity" and take a preemptive strike against Iran. The attack launched by Israel includes some key nuclear facilities in Iran and the targeted removal of key figures. It can be seen that Israel wants to "take the initiative" to destroy Iran's nuclear capabilities, otherwise Iran will cross the nuclear threshold."

3. Will this conflict last?

Israel: War will expand

Israeli Defense Minister Katz said that after Israel launched an attack on Iran, missile and drone attacks against Israel and its civilians are expected in the near future. An Israeli military spokesman said Iran has launched more than 100 drones to Israel in the past few hours. Israel has 200 fighter jets involved in the air strikes on Iran.

Iran: Rejecting the Sixth Round of Talks, the United States and Israel

will pay a heavy price

Iran said it had begun to take defensive and legal actions against Israel, and the world should now understand why Iran insisted on nuclear enrichment.

Aladdin Boroujerdi, a senior Iranian MP and member of the parliamentary National Security and Foreign Policy Committee, said the sixth round of talks with the United States will be cancelled after the Israeli attack. Previously, the United States and Iran were originally scheduled to hold a new round of talks on the Iranian nuclear issue on the 15th. Before the talks, the United States decided to withdraw non-essential U.S. personnel and their families from the U.S. Embassy in Iraq and other places. At the same time, the U.S. Defense Minister approved the voluntary evacuation of U.S. military families in the Middle East. U.S. President Trump said he was not optimistic about reaching a deal. Iran sends a double signal, on the one hand, believing that the two sides may even reach an agreement "soon", and on the other hand, warns that if Iran is attacked after the negotiations break down, it will take retaliation to crack down on US military bases in the Middle East.

The Iranian Foreign Ministry said that as a major supporter of Israel, the United States will be responsible for the consequences of Israel's risky behavior. The Israeli attack could not have been completed without the help of the United States. Israel and the United States will "pay a very heavy price."

According to Iran's Tasnim News Agency, Iran will initiate a process for the removal of the Israeli regime in view of the serious mistakes made by the Israeli regime. It is reported that Iran's response to Israel's terrorist military attacks will be different from previous reactions. Israeli Prime Minister Netanyahu’s mistakes will push the Zionist regime to the brink of collapse, which will mark the beginning of the painful end of Israeli entities.

The Permanent Mission of Iran to the United Nations sent a letter to the rotating president of the Security Council, requesting an emergency meeting to deal with Israel's blatant aggression against Iran. The letter strongly condemned Israel's aggression against Iran's peaceful nuclear facilities and senior military officials with the support of the United States, and called on the Security Council to convene an immediate emergency meeting and take decisive action on these crimes and provocative acts. The letter stated that Israel launched a series of attacks on Iran's nuclear facilities and civil infrastructure recklessly, illegally and premeditatedly. These actions are considered to be a clear violation of the United Nations Charter and the basic norms of international law, and their dangerous consequences are severely threatening regional and international peace and security.

United States: Hope to negotiate, the United States does not assist

Trump said that Iran cannot have a nuclear bomb and we hope to return to the negotiating table.

US officials pointed out that Israel has launched an attack on Iran and the United States has not intervened or assisted.

Jack Reed, the top Democratic member of the U.S. Senate Armed Services Committee, severely criticized Israel 's attack on Iran, accusing Israel of putting the region and U.S. military at risk. "The Israeli air strikes on Iran were a shocking decision and a reckless escalation that could trigger regional violence," Reed said.

United Kingdom: Will not protect Israel

According to a Times reporter on social media, Britain will not protect Israel at a time when Iran may retaliate.

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Iran has made harsh words: any war with Iran will cost the United States a heavy price. Once a conflict breaks out, U.S. military bases in Iraq, Kuwait, Qatar, Bahrain and the UAE may all be hit by Iranian missiles.

Hussein Salami, commander of the Iranian Revolutionary Guards, said bluntly: "We monitor the depth of the enemy's targets and prepare for any situation."

Iranian Defense Minister Aziz Nasselzad also warned that no attack would be hit back and vowed to bomb US bases in the region.

But is this just a rhetoric, or will Iran really take action? The United States has been stationed in Iraq for nearly eight years and has just withdrawn its last batch of troops. Whether it is willing to fall into a protracted conflict again in the Middle East is also questionable.

Any military strike against Iran will not be a quick or simple action, but an initiative full of huge strategic and security complexity. Once a confrontation breaks out, it will mean that the confrontation scope will be expanded to multiple fronts, regional balance will be destroyed on a large scale, and the vital interests of the Middle East will be severely hit.

British Sky News predicts: The conflict will see the following situations: Israel continues to attack Iran; Iran strikes back with all its might; the United States is forced to help defend Israel; Iran attacks Israel, the United States and possible U.S. allies.

4. How much impact will it have on the crypto market?

As the Iraq-Iran conflict broke out, global oil prices saw the largest single- day percentage increase in years, reflecting concerns that wider conflicts in the Middle East could lead to severe energy supply disruptions. The global benchmark Brent crude oil rose 4.3% to $72.4 a barrel. U.S. benchmark West Texas Intermediate crude rose 5% to $71.4 a barrel. According to Reuters, this is the largest intraday gain in each benchmark index since March 2022, one month after Russia launched a full-scale invasion of Ukraine.

Ahmad Assiri, a research strategist at financial services firm Pepperstone, wrote in a research note that the surge in Brent crude oil prices “shows people are both concerned about supply and are increasingly aware that negative news may extend the escalation of tensions, unlike previous Israeli- Iran incidents.” Investors are worried about how Iran's retaliation will take place, whether the United States will be the target, and whether a key oil route will be interrupted.

In terms of the stock market, U.S. stock index futures fell, and investors turned to traditional safe-haven investments such as gold. Dow Jones futures fell 1.3%, down more than 540 points. The S&P 500 futures and the Nasdaq Composite futures fell even more, down 1.4% and 1.6% respectively. Gold prices rose about 1% to $3,413.6 per ounce.

As an important oil-producing region in the world, the Middle East conflict will directly impact global energy supply. Brent crude futures jumped 3.7% after Israeli air strikes, and market concerns about disruptions in oil supply heated up.

Theoretically, rising oil prices push up inflation expectations and will strengthen the US dollar's position as a safe-haven currency. The strengthening of the U.S. dollar index usually suppresses the price of cryptocurrencies denominated in US dollars, especially risky assets such as Bitcoin. In addition, rising energy costs may indirectly affect miners' profits, resulting in computing power migration or selling tokens to maintain operations, further putting pressure on the crypto market.

Because this Middle East conflict involves extreme events such as nuclear facilities strikes and high-level assassinations, there is a possibility that it may trigger wider military confrontation (such as Iran’s retaliation against Israel and Yemen’s Houthi intervention), resulting in a continued rise in energy prices and market risk premiums. If the conflict spills over to key waterways such as the Strait of Hormuz, global supply chains and financial markets will face more severe impacts, and the risk of cryptocurrencies being further under pressure due to liquidity depletion and regulatory tightening is not ruled out.

But will the crypto market trend really continue to be in a downturn?

We can refer to the impact of the Iraq-Iran conflict on the crypto market in April 2024.

When Iran launched a retaliatory attack on Israel in April 2024, Bitcoin plummeted 7% in one hour to $626.9749 million, mainstream currencies such as BNB fell by more than 9%, and bullish contracts of $1.5 billion were closed. The escalation of conflict has led to a collapse in investor confidence in high-risk assets, and they have turned to traditional safe-haven assets such as gold and the US dollar.

But just one day later, the market rebounded. On April 15, BTC rebounded to $66,096.14, similar to the market trend after mid-May - maintaining a level of more than $65,000.

In summary, the conflict between Iran and Israel will affect the trend of the crypto market in the short term, and there are countless examples of geopolitical risks that lead to collapse of the financial market. However, in the long run, the crypto market still has the potential to rise due to positive factors such as clear regulatory policies and institutional entry.

Source: Golden Finance, Al Jazeera, Wall Street Journal, Jinshi Data, Global Network, BBC, Southern Daily, EURO NEWS