The Middle East is engulfed in conflict again, with the US-Iran tensions escalating, causing violent fluctuations in global markets. Bitcoin experienced a typical sharp drop followed by a V-shaped rebound, with network liquidations and capital inflows occurring simultaneously, as the narrative of 'digital gold' is once again put to the test.
1. Market Immediate Reaction: Panic → Liquidation → Recovery
On February 28, news of the US-Israel joint airstrike landed, causing BTC to quickly dip, reaching a 24-hour low of $63,216, a drop of nearly 7%; mainstream coins like ETH and SOL also saw significant declines. According to CoinGlass data, approximately $460 million was liquidated across the network in 24 hours, affecting over 140,000 people, with long positions remaining high.
The market quickly recovered, with BTC returning to the range of $67,000–$69,000, displaying a typical crisis pulse trend.
At the same time, gold surged and the dollar strengthened, with traditional safe havens and cryptocurrencies showing a clear divergence.
2. Why did the conflict cause BTC to drop first? Core logic
1. High beta + high leverage: BTC remains a risk asset, with a high correlation to U.S. stocks; news shocks trigger stop-losses and forced liquidations, creating a short-term spiral of decline → liquidation → accelerated decline.
2. Liquidity first: In the initial stage of the crisis, capital first rushes for fiat currency, gold, and cash-like assets, while BTC is temporarily reduced to exchange for liquidity.
3. Institutional behavior dominates: Short-term net outflow from spot ETFs exacerbates selling pressure; liquidity is thin on weekends, amplifying volatility.
3. On the contrary, medium-term is more bullish: Three major supports are being fulfilled
1. Long-term pricing of geopolitical risk aversion: Prolonged conflicts, escalated sanctions, and increased risks of freezing fiat currency lead Middle Eastern and global funds to allocate BTC as an alternative asset against regulation and freezing.
2. Energy → Inflation → Macro: The situation in the Strait of Hormuz pushes up oil prices, inflation rebound expectations heat up, the Federal Reserve's interest rate cut pace becomes more cautious, easing is delayed but risk premiums rise, which is not entirely bearish for BTC in the medium term.
3. Strengthening of decentralized value: In the context of war and sanctions, the demand for cross-border transfers and asset preservation increases, with BTC's borderless and censorship-resistant attributes continuously supported by real demand.
4. Historical comparison: How BTC performs during geopolitical crises
- 2022 Russia-Ukraine conflict: initial sharp decline, followed by a rebound;
- 2023 Israel-Palestine, 2024 Middle Eastern tensions: both are short-term sharp drops, medium-term recoveries;
- Consistent pattern: Sudden bad news triggers a sell-off, continuous risks elevate premiums.
5. How do we view the current situation? Key observation points
- Will the situation expand: Full-scale war → Increased volatility; Limited strikes → Rapid stabilization;
- Oil and inflation paths: Influencing the Federal Reserve and global liquidity;
- ETF funds and leverage structure: A return to net inflow would indicate a more stable rebound.
6. Operation reminders
- Strict control of leverage: Geopolitical black swans are frequent, and high positions + high leverage can easily be wiped out in one wave;
- Gradual response: Do not blindly cut losses during sharp drops, do not chase after rebounds; manage with a range mindset;
- Long-term logic remains unchanged: BTC's resistance to sanctions, inflation, and its decentralized value will only strengthen in chaotic times.
Summary
The U.S.-Iran conflict has not broken BTC's long-term logic; it has only amplified short-term volatility. In the short term, focus on sentiment and leverage; in the medium term, focus on capital and macro; in the long term, focus on consensus and alternative value.
The more chaotic the geopolitics, the clearer the significance of decentralized assets. Maintain positions, control leverage, and wait for the market to provide clearer direction.