The Iran-Israel conflict has caused the crypto market to collapse. Will it continue to affect the BTC market?

Deng Tong, Golden Finance

On June 13, 2025, Israel launched a preemptive strike against Iran, and Israeli Defense Minister Katz officially announced that it would continue to strike Iran: After Israel launched an attack on Iran, missile and drone attacks against Israel and its civilians are expected in the near future.

A man walked through the site of a damaged residential area in northern Tehran on Friday.

Affected by this news, the crypto market fell sharply, with BTC falling to as low as $103,081, down 6.4% from its high of more than $110,000 on June 10. As of press time, it was trading at $104,175, down 3.3% on the day. ETH was trading at $2,516.77, down 8.6% on the day.

But in fact, Trump had already warned of the Iran-Israel conflict yesterday: Trump said (when asked about Iran) American personnel are withdrawing (from the Middle East). This can be a dangerous place. (On the tension with Iran) We will wait and see. They can't have nuclear weapons, very simple.

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

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

1. Review of modern Iran-Israel relations

The Pahlavi Dynasty: From prosperity to decline

During the Pahlavi Dynasty of Iran (1925-1979), Iran-Israel relations experienced a transition from prosperity to decline.

After the outbreak of the first Arab-Israeli War in 1948, Israel successfully occupied more territory than the area approved by the United Nations plan. At that time, Iran, which was under the rule of Shah Mohammad Reza Pahlavi, the second king of the Pahlavi Dynasty, became the second Muslim-dominated country to officially recognize Israel after Turkey.

When Mohammad Mossadegh became Iran's prime minister in 1951, Mossadegh severed Iran's ties with Israel - a relationship he saw as in line with Western interests in the region.

That changed dramatically when a coup organized by British and American intelligence agencies overthrew Mossadegh's government in 1953. The coup restored the Shah to power, 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 exchanged ambassadors in the 1970s. Bilateral trade relations grew, and Iran soon became Israel's main oil supplier, and the two countries built a pipeline designed to transport Iranian oil to Israel and then to Europe.

Tehran and Tel Aviv also engaged in extensive military and security cooperation.

Islamic Republic of Iran: Iran-Israel relations continue to cool

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

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

"In order to overcome the differences between 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 put Arab regimes allied with the United States on the defensive," said Treita Parsi, executive vice president of the Quincy Institute for Responsible States.

This laid the groundwork for the increasingly deteriorating relations between Iran and Israel.

Second, what caused this round of conflict?

Israel named its action against Iran "Strength of a Lion". Israel said that Iran has enough enriched uranium to make multiple bombs within a few days, so it needs to take action to deal with this "imminent threat."

Netanyahu said the "Lion's Power" attacked Iran's main uranium enrichment facility at Natanz, nuclear scientists and what he called "the heart of Iran's ballistic missile program." Six nuclear scientists were killed in the attack, according to Iran's state news agency Tasnim.

According to an interview with Nanfang Daily with Sun Degang, director and researcher of the Middle East Research Center of Fudan University: "Israel has long had plans to attack 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-concentration nuclear materials capable of making nuclear bombs. Israel will not allow Iran to challenge its regional "nuclear monopoly" status. Therefore, Israel may want to seize this "window of opportunity" to launch a preemptive strike against Iran. The targets of the attack launched by Israel this time include some key nuclear facilities in Iran, as well as targeted elimination of key figures. It can be seen that Israel wants to "preemptively" destroy Iran's nuclear capabilities, otherwise, Iran will cross the nuclear threshold."

3. Will this conflict continue?

Israel: The 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 that Iran has launched more than 100 drones at Israel in the past few hours. And Israel has 200 fighter jets involved in air strikes on Iran.

Iran: Rejecting the sixth round of talks, the United States and Israel will pay a heavy price

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

Aladdin Boroujerdi, a senior Iranian MP and member of the parliament's National Security and Foreign Policy Committee, said that after the Israeli attack, the sixth round of talks with the United States will be canceled. Prior to this, the United States and Iran were 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 American personnel and their families from the U.S. Embassy in Iraq and other places, and the U.S. Secretary of Defense approved the voluntary evacuation of U.S. military families in the Middle East. U.S. President Trump expressed pessimism about reaching an agreement. Iran sent a double signal. On the one hand, it believed that the two sides might even reach an agreement "soon", and on the other hand, it warned that if Iran was attacked after the negotiations broke down, it would take retaliatory actions to strike U.S. military bases in the Middle East.

The Iranian Foreign Ministry stated that as Israel's main supporter, the United States will be responsible for the consequences of Israel's adventurous behavior. Israel's attack could not have been carried out 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 the process of clearing out the Israeli regime in view of the serious mistakes it has made against Iran. Iran's response to Israel's terrorist military attack will reportedly be different from previous responses. Israeli Prime Minister Netanyahu's mistake will push the Zionist regime to the brink of collapse, which will mark the beginning of the painful end of the Israeli entity.

The Iranian Permanent Mission to the United Nations sent a letter to the rotating president of the Security Council, requesting an emergency meeting to respond to 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 hold an emergency meeting immediately and take decisive action against these criminal and provocative acts. The letter stated that Israel has recklessly, illegally and premeditatedly launched a series of attacks on Iran's nuclear facilities and civilian infrastructure. These actions are considered to be a clear violation of the UN Charter and the basic norms of international law, and their dangerous consequences seriously threaten regional and international peace and security.

The United States: Hope for negotiations, the United States did not assist

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

US officials pointed out: Israel has launched attacks on Iran, and the United States has not intervened or assisted.

Jack Reed, the top Democrat on the Senate Armed Services Committee, harshly criticized Israel's attack on Iran, accusing Israel of putting the region and US troops at risk. Reed said: "Israel's decision to launch air strikes on Iran is a shocking decision and a reckless escalation that could provoke regional violence."

Britain: Will not protect Israel

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

Iran has already threatened: Any war with Iran will cost the United States a heavy price. In the event of a conflict, US military bases in Iraq, Kuwait, Qatar, Bahrain and the UAE may all be attacked by Iranian missiles.

Hussein Salami, commander of the Iranian Revolutionary Guard, said bluntly: "We monitor the depth of enemy targets and are prepared for any situation."

Iranian Defense Minister Aziz Nasserzadeh also warned that any attack would not be retaliated and vowed to bomb US bases in the region.

But is this just talk, 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 get involved in a protracted conflict in the Middle East again is also worth discussing.

Any military strike against Iran will not be a quick or simple action, but a move full of huge strategic and security complexities. Once a confrontation breaks out, it will mean that the scope of the confrontation will expand to multiple fronts, the regional balance will be widely damaged, and the vital interests of the Middle East will suffer a heavy blow.

British Sky News predicts that the conflict will be as follows: 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.

Fourth, how much impact will it have on the crypto market?

With the outbreak of the Iran-Israel conflict, global oil prices saw their largest one-day percentage increase in years, reflecting concerns that a wider conflict in the Middle East could lead to serious energy supply disruptions. Global benchmark Brent crude 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 was the largest intraday gain for benchmark indices since March 2022, a month after Russia launched a full-scale invasion of Ukraine.

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

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

In theory, rising oil prices push up inflation expectations and strengthen the dollar's position as a safe-haven currency. A stronger dollar index usually suppresses the price of cryptocurrencies denominated in dollars, especially risky assets such as Bitcoin. In addition, rising energy costs may indirectly affect miners' profits, leading to the migration of computing power or the sale of tokens to maintain operations, further pressuring the crypto market.

Because this Middle East conflict involves extreme events such as nuclear facility strikes and assassinations of senior officials, there is a possibility that it may trigger a wider military confrontation (such as Iran's retaliation against Israel and the intervention of the Houthi armed forces in Yemen), causing energy prices and market risk premiums to continue to rise. If the conflict spills over to key waterways such as the Strait of Hormuz, the global supply chain and financial markets will face a more severe impact, and the risk of cryptocurrencies being further pressured by liquidity depletion and tightening regulations cannot be ruled out.

But will the crypto market really continue to be sluggish?

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

When Iran launched a retaliatory attack on Israel in April 2024, Bitcoin plunged 7% to $626,974,900 in one hour, mainstream currencies such as BNB fell by more than 9%, and $1.5 billion in bullish contracts were closed. The escalation of the conflict has caused investors' confidence in high-risk assets to collapse, 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 above $65,000.

In summary, the Iran-Israel conflict will affect the trend of the crypto market in the short term. There are countless examples of geopolitical risks leading to the collapse of financial markets, but in the long run, the crypto market is still affected by favorable factors such as clear regulatory policies and institutional entry, and has the potential to rise.

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