Bitcoin dropped sharply early Friday following Israel’s overnight strikes on Iran, weakening its recent position as a perceived safe-haven asset.
The leading digital asset fell over 5 percent, from a local high of $108,000 on Thursday to approximately $102,000, as market participants reacted to escalating conflict in the Middle East.
Oil markets surged in response to the developments, with Brent and WTI crude benchmarks each climbing more than 10 percent.
Traders cited fears of disrupted supply chains across the energy-rich Gulf region, particularly if Iran retaliates against Israel or targets American military positions in Iraq or Syria. Gold also advanced modestly, up around 1 percent, as investors sought traditional stores of value.
The Israeli military said the strikes, dubbed Operation Rising Lion, targeted dozens of facilities across Iran, including military bases and uranium enrichment infrastructure at Natanz.
Per the BBC, the attack marked one of the largest military operations on Iranian soil since the Iran-Iraq War. Iran’s state media confirmed the deaths of several senior commanders, including IRGC chief Hossein Salami and nuclear scientist Fereydoon Abbasi. The International Atomic Energy Agency stated it is monitoring radiation levels and the safety of its inspectors.
Israeli authorities have declared a state of emergency in anticipation of retaliatory action, with civilians instructed to remain near shelters. Prime Minister Netanyahu framed the assault as an existential defense against Iran’s nuclear ambitions, while Defense Minister Israel Katz called it a defining moment in the nation’s history.
The financial implications were immediate. Traditional markets reflected uncertainty, with equities in Asia opening lower and defensive assets seeing inflows. The spike in oil prices raised concerns about broader inflationary pressures, which could in turn influence monetary policy across major economies.
Bitcoin’s decline may reflect its correlation with risk assets during periods of geopolitical stress. Despite recent narratives positioning Bitcoin as digital gold, Friday’s decline echoed its behavior during prior global flashpoints, where liquidation pressure and volatility often override store-of-value arguments.
Over $1.1 billion has been liquidated across the crypto market in the last 24 hours as a result of new the geopolitical environment.
This disconnect may be reinforced by structural shifts in investor positioning. Institutional portfolios with Bitcoin allocations often balance those against high-beta assets, which are typically trimmed during volatility spikes. In contrast, commodities such as oil tend to react immediately to real-world supply threats, bolstering their short-term utility during crises.
The reaction also puts focus back on Bitcoin’s maturity as a macro hedge. While long-term proponents argue that Bitcoin’s fixed supply offers protection against fiat debasement and central bank intervention, acute geopolitical shocks continue to test the asset’s role within diversified portfolios.
Global leaders have urged restraint amid fears of further escalation. UK Prime Minister Keir Starmer called for diplomacy, while the United Nations expressed alarm at the targeting of nuclear facilities. US President Donald Trump said his administration had prior knowledge of the Israeli plans but did not participate in the operation. Secretary of State Marco Rubio reiterated that US forces in the region are on alert but uninvolved.
As tensions persist, market participants are closely watching Iranian statements, potential retaliatory actions, and any broader shifts in energy or currency markets. The outcome may shape regional dynamics as well as investor attitudes toward risk mitigation strategies in digital and traditional asset classes alike.
While oil and gold gained from their embedded roles in geopolitical stress scenarios, Bitcoin’s pullback underlined its sensitivity to liquidity dynamics and investor psychology amid military conflict.
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