February 28, 2026: As tensions between the US and Iran escalate, global financial markets are once again subjected to an extreme test of geopolitical pressure. In just a few days, Bitcoin plunged from above $90,000 to a low of $60,000. However, as of March 17, the BTC price has rebounded strongly, reclaiming the $74,000 level. This scenario reminds the market of the aftermath of the full-scale Russia-Ukraine conflict in February 2022—Bitcoin experienced a sharp, brief drop, then quickly bounced back, forming a classic "V-shaped" reversal.
Both events followed a three-stage pattern: "panic selling—rapid recognition—capital replenishment." On the surface, history seems to rhyme. But a deeper analysis of the macroeconomic backdrop and market structure reveals that the internal drivers behind this price rebound have fundamentally changed.
Why Does Bitcoin Always Experience "Panic Selling" at the Outset of War?
When markets face sudden geopolitical shocks, Bitcoin often becomes the first target for "liquidity extraction." On February 28, 2026, the day the conflict erupted, Bitcoin dropped to $63,000 within 24 hours, and total crypto liquidations exceeded $1.1 billion. This mirrors the phenomenon seen on February 24, 2022, when the Russia-Ukraine war began and Bitcoin fell more than 10% in a single day.
The core of this "initial drop" mechanism lies in Bitcoin’s high liquidity and 24/7 trading nature. When extreme uncertainty like war strikes, both institutional and individual investors need to quickly raise cash or meet margin calls. As the only major asset globally that can be liquidated in real time around the clock, Bitcoin acts as an "automatic teller machine"—it’s the first to be sold and the first to have its risk repriced. Notably, academic research confirms that crypto networks often show heightened correlations even before war officially breaks out, likely due to investors anticipating conflict and adjusting their positions in advance.
From "Following the Downtrend" to "Leading the Rally": How Has Bitcoin’s Safe Haven Role Changed?
In the early days of the Russia-Ukraine conflict in 2022, Bitcoin did not display safe haven characteristics; its price movements closely tracked risk assets. But during the 2026 US-Iran conflict, Bitcoin has shown strong performance, diverging sharply from gold and stocks. Data shows that since the conflict began, Bitcoin has risen over 11%, while the S&P 500 fell about 3% and gold dropped roughly 5%.
This divergence reflects a structural shift in how the market perceives Bitcoin’s attributes. Bitcoin is evolving from a pure "risk asset" into an "alternative tool" for hedging specific types of risk. In this conflict, Iran’s threat to block the Strait of Hormuz sent oil prices soaring and intensified concerns about "stagflation." In this environment, Bitcoin’s non-sovereign status, fixed supply, and immunity from freezing have led some capital to view it as a hedge against fiat currency depreciation and vulnerabilities in the traditional financial system—not just as a hedge against war itself.
How Have Spot ETFs Changed Market Resilience During Wartime?
The approval of US spot Bitcoin ETFs in early 2024 marks the most significant structural difference between this conflict and the Russia-Ukraine war. Institutional capital now enters the market on a large scale through regulated channels, providing unprecedented "shock absorption" capacity.
This change was especially evident during the market turmoil in early March 2026. When the Bitcoin price fell to around $63,000, there was no cascading crash. Instead, strong institutional buying emerged. Data shows that BlackRock’s iShares Bitcoin Trust (IBIT) recorded about 1.5% inflows after the conflict escalated, while the world’s largest gold ETF—SPDR Gold Shares (GLD)—saw roughly 2.7% outflows during the same period. This divergence in capital flows indicates that long-term allocation demand now treats price dips as buying opportunities, not exit signals. The ETF channel enables institutional capital to make orderly allocations through regulated means even when traditional financial markets are closed.
Macro Fundamentals vs. Geopolitical Risk: Which Variable Ultimately Drives Price Direction?
Although geopolitical conflict is the immediate catalyst in the current market, Bitcoin’s medium-term trajectory is still determined by macro liquidity expectations. The oil price—inflation—interest rate transmission chain is the core logic connecting war and Bitcoin prices.
In this conflict, the risk of a potential blockade of the Strait of Hormuz pushed oil prices above $100 per barrel. Surging energy prices reinforce inflation expectations, which in turn impact the Federal Reserve’s monetary policy path. If markets expect central banks to maintain higher rates for longer or even hike rates, tightening liquidity will suppress all risk assets. Academic studies also confirm that movements in the US Dollar Index (DXY) have a significant negative impact on the crypto market’s network structure, while oil volatility increases market correlations. Therefore, while a ceasefire agreement is positive, if inflationary pressures persist, the sustainability of the rebound will be tested. This week’s Fed meeting (March 17-18) will be a key variable in determining whether Bitcoin can hold above $73,000.
Three Scenarios for the Future: How Might Markets React After a Ceasefire Agreement?
Based on historical patterns and the current macro environment, there are three main scenarios for the market following the US-Iran conflict:
Scenario 1: Controlled conflict and "historical pattern continuation." If the conflict remains contained, the market will continue the "buy the dip" logic. Bitcoin may experience wide fluctuations at current levels, gradually pricing out geopolitical risk premiums, and slowly trend upward as risk appetite recovers. Past cases show that Bitcoin nearly doubled within 30 days after the end of the 2020 Nagorno-Karabakh war, but this pattern was highly dependent on the globally accommodative monetary policy at the time.
Scenario 2: Risk spillover and "double bottom." If the conflict causes oil prices to surge uncontrollably, forcing major central banks to maintain a hawkish stance, macro liquidity pressures will outweigh micro resilience. In this scenario, Bitcoin may not be immune and could face a second bottom alongside other risk assets.
Scenario 3: Paradigm shift and "accelerated adoption." If the conflict drags on, triggering a crisis of confidence in the dollar system and the stability of some national currencies, Bitcoin’s role as a "non-sovereign store of value" will be amplified like never before. Capital may shift from US Treasuries and gold, accelerating Bitcoin adoption and driving an independent rally.
Potential Risks: What Factors Could Disrupt the Current Recovery Narrative?
The current market recovery faces three major verifiable risk variables:
First, the risk of energy supply chain disruption. If the Strait of Hormuz remains blocked for an extended period and oil prices stay above $100 per barrel, energy-driven inflation will force central banks worldwide to reassess the window for accommodative policy, directly suppressing crypto asset valuations.
Second, the dollar liquidity siphon effect. During conflict, the US Dollar Index often strengthens due to safe haven demand. Since Bitcoin is priced in dollars, a strong dollar means higher purchase costs for holders of other currencies, which may temporarily dampen demand.
Third, structural risks in the derivatives market. The current options market has significant Gamma exposure near $75,000. Market makers’ hedging activities could create a "magnet effect" as prices approach this area. If Bitcoin fails to break through effectively, it could trigger another round of volatility.
Conclusion
Reviewing Bitcoin’s performance since the onset of the US-Iran conflict in 2026, its "sharp drop and rapid rebound" resembles the 2022 Russia-Ukraine war, but the underlying drivers have fundamentally changed. Deep institutional involvement enabled by spot ETFs has given the market greater "shock absorption" capacity, and Bitcoin’s role is shifting from a pure risk asset to an alternative tool for hedging specific risks. However, the logic of geopolitical conflict transmitting to macro fundamentals via the "oil price—inflation—interest rate" chain remains unchanged. For investors, understanding these "differences within similarities" and closely monitoring Fed policy signals and developments in the Strait of Hormuz is far more meaningful than simply applying historical templates.
FAQ
Q1: Why does Bitcoin drop first when war breaks out?
A: This mainly stems from Bitcoin’s high liquidity. During sudden geopolitical crises, investors tend to sell the most liquid assets to raise cash or meet margin calls. Bitcoin’s 24/7 trading makes it the first asset to be sold and the first to have its risk repriced.
Q2: Is Bitcoin a safe haven or a risk asset during war?
A: Market perceptions are shifting. In the current US-Iran conflict, Bitcoin has outperformed gold and stocks, showing resilience unlike before. It is evolving into an alternative tool for hedging specific risks (such as fiat depreciation and vulnerabilities in the traditional financial system), rather than being purely a safe haven or risk asset.
Q3: Historically, what happens to Bitcoin after wars end?
A: Historical patterns show that after a ceasefire agreement, geopolitical risk premiums fade and risk appetite returns, which typically benefits Bitcoin’s price. However, the ultimate direction depends on the prevailing macro policy environment. For example, Bitcoin surged after the 2020 Nagorno-Karabakh war due to accommodative policies, but fell during Russia-Ukraine negotiations in 2022 amid rate hike expectations.
Q4: What are the key differences between the current US-Iran conflict and the Russia-Ukraine war?
A: The most fundamental difference is the change in market structure. After US spot Bitcoin ETFs were approved in early 2024, institutional capital can allocate Bitcoin through regulated channels, creating a stronger "volatility buffer." Additionally, this conflict directly affects the global oil lifeline, altering the path of inflation expectations compared to previous events.
