Bitcoin has plunged sharply early on Friday following Israel’s overnight strike in Iran, weakening its recent position as a perceived safe hull asset.
Key digital assets fell more than 5% from local highs on Thursday to around $103,000 as market participants responded to the escalation of the Middle East conflict.
The oil market has surged in response to development, with Brent and WTI’s rough benchmarks climbing more than 10% each.
As of press time, Bitcoin has recovered slightly to $104,165.
Traders cited the fears that disrupt supply chains across the energy-rich Gulf region, particularly if Iran retaliates against Israel or targets the position of US military in Iraq or Syria. Gold also rose about 1% as investors were looking for a store with traditional value.
What we know so far
Israeli forces said the strike, called Operation Raisinglion, targeted dozens of facilities across Iran, including Natanz’s military bases and uranium-enriched infrastructure.
According to the BBC, the attack marked one of the largest military operations in Iranian soil since the Iranian-Iraq war. Iranian state media confirmed the deaths of several senior commanders, including IRGC’s chief Hossein Salami and nuclear scientist Feredun Abbasi. The International Atomic Energy Agency said it is monitoring radiation levels and the safety of its inspectors.
Israeli authorities have declared a state of emergency in anti-guilty behaviour, and civilians have been instructed to stay near shelters. Prime Minister Netanyahu framed the assault as an existential defense against Iran’s nuclear ambitions, and Israeli Defense Minister Katz called it a defining moment in the country’s history.
The financial impact was immediate. Traditional markets reflect uncertainty, with Asian stocks seeing low inflows. Surges in oil prices raise concerns about wider inflationary pressures, which in turn could have an impact on monetary policy across the major economies.
The decline in Bitcoin reflects a correlation with risk assets during periods of geopolitical stress. Despite the story of placing Bitcoin as digital gold, Friday’s decline reflected its behavior during the previous global flashpoint.
Over $1.1 billion has been liquidated across the Crypto market in the last 24 hours as a result of the new geopolitical environment.
This disconnection could be strengthened by structural changes in investor positioning. Institutional portfolios with bitcoin allocations often balance them with high beta assets. This is usually trimmed during volatility spikes. In contrast, commodities such as oil tend to respond quickly to real-world supply threats, enhancing their short-term utility during a crisis.
This response also focuses on the maturation of Bitcoin as a macro hedge. Long-term supporters argue that a fixed supply of Bitcoin provides protection against Fiat’s decline and central bank interventions, but acute geopolitical shocks continue to test the role of assets within their diversified portfolios.
Global leaders have spurred restraint amid fears of further escalation. British Prime Minister Kiel Starmer called for diplomacy, and the United Nations has issued a warning to targets at nuclear facilities. President Donald Trump said his administration had prior knowledge of Israel’s plans but did not take part in the project. Secretary of State Marco Rubio reiterated that US troops in the area are wary but not involved.
As tensions continue, market participants are closely watching Iran’s statements, potential retaliatory actions, and wider changes in energy or currency markets. The results could shape regional power and investors’ attitudes towards digital and traditional asset class risk mitigation strategies.
While oil and gold came from roles embedded in geopolitical stress scenarios, Bitcoin’s pullback highlighted its sensitivity to liquidity dynamics and investor psychology amid military conflicts.