If the US officially enters the conflict between Israel and Iran, Bitcoin and the entire crypto market may face a sharp decline in the short term.
Judging by the latest publications from Donald Trump and geopolitical rumors, the White House may decide to intervene. Analysts expect that in the event of escalation in global markets, there will be a heightened flight from risk — liquidity will leave volatile assets.
Bitcoin is at risk of falling if the US intervenes
Bitcoin is currently trading around $104,500, but if the situation deteriorates sharply, it could lose 10–20% in just a few days. Similar scenarios have already been observed during other geopolitical crises.
When a large-scale conflict begins, investors typically flee to traditional safe-haven assets — the dollar, gold, and US Treasury bonds.
Although crypto is often presented as an alternative to traditional assets, in stressful situations it behaves like a high-risk instrument.
Thus, at the beginning of the Russia-Ukraine war in 2022, Bitcoin lost more than 12% in just a week. Later, it partially recovered, but throughout the escalation, it moved in unison with the stock market.
On-chain metrics also confirm rising anxiety: leverage is falling, transfers to exchanges are increasing, and trading volumes are decreasing. All these signals indicate investors' flight and risk reduction.
Macroeconomic factors will increase volatility in the crypto market
If the US really intervenes and a full-scale conflict begins, oil may immediately rise. For #FRA (Fed), this is a problem, as rates can no longer be lowered, meaning the course towards a tight policy will have to be prolonged or even intensified.
A spike in energy prices could easily push inflation above 2%, especially considering how nervously WTI oil reacts to everything happening in the Middle East.
Supply disruptions, rising logistics costs, all of this will hit businesses around the world.
In such a case, the Fed will have to choose: save the economy or curb inflation. If they choose the latter, real yields will rise, and crypto will decline.
The yield on 10-year US bonds is already approaching 4.4%. If military operation expenses rise, it may continue to increase.
Against the backdrop of a national debt of $36 trillion, this will heighten concerns about budget sustainability, especially among large investors who are already anxiously watching the dynamics of the debt markets.
At the same time, the dollar may strengthen. Currently, the DXY index is around 98.3, but in the event of escalation, it is likely to continue to rise. Global capitals typically flow into the dollar as a safe-haven asset during such periods.
And the rising dollar historically puts pressure on Bitcoin and altcoins. This is especially felt in developing countries, where capital flows into the US currency.
The crypto market suffers even when turbulence increases in the traditional stock market.
The VIX index shows fear in the stock market. It usually rises during periods of military and geopolitical crises. This leads to a reduction in risk positions and liquidations on crypto exchanges.
Bitcoin's future depends on the duration of the conflict and the actions of the Fed
If US intervention is short-lived and leads to a quick ceasefire, markets may recover losses. Historically, Bitcoin has rebounded within 4–6 weeks after such shocks — this has already happened during previous military crises.
But if the war drags on or spreads across the region, crypto may be stuck in turbulence for a long time: liquidity will leave, and prices will be under pressure. Until it becomes clear how everything will end, investors are unlikely to venture into risk.
On the other hand, if supply disruptions reignite inflation, Bitcoin may be recalled as a tool against currency devaluation.
But here the problem arises. High inflation is a reason for the Fed to maintain a tight policy, which means the crypto market will struggle to show sustainable growth.
Institutional investments under such conditions may stall or even decline. Positions in futures on CME, the volume of stablecoins, and activity in second-layer networks will become key indicators of sentiment in the coming weeks.
Key levels to watch are the psychological mark of $100,000 for Bitcoin and the zone of $2,000 for Ethereum.
If they do not hold, technical selling may increase pressure across the market and provoke a deeper correction for most major tokens.
What is important to monitor right now
Investors should closely watch the following signals:
dynamics of oil prices and futures contracts
Fed statements on inflation and rates
auction results for government bonds and yield spreads
outflows from exchanges and leverage levels in crypto
the VIX index and other global risk indicators
If the US intervenes in the conflict, Bitcoin's short-term future will depend not on its own factors but on the macroeconomic agenda.
Traders should prepare for turbulence, hedge positions, and monitor the development of the situation in real-time.
