What started as an Israeli attack on Iran hours earlier has escalated into the widest Middle East military conflict in decades, posing a risk to financial markets, including cryptocurrencies.
According to reports on Bloomberg, CNN and Reuters, Iran launched waves of missiles and drones targeting not only Israel, but US bases and interests across the Gulf. Bahrain confirmed that a US military base had been attacked. Qatar and the UAE said they intercepted missiles over their territory. Explosions were heard in Dubai. Bahrain closed its airspace completely.
Iran’s semi-official Tasnim news agency said all US bases and interests in the region would be targeted.
President Trump said the United States had begun “major combat operations in Iran” aimed at eliminating the country’s missile stockpile, navy and nuclear infrastructure. “The lives of brave American heroes can be lost and we can have casualties,” he said. “It often happens in war.”
Bitcoin, which had already fallen below $64,000 upon the initial Israeli attacks, held above $63,000 when the wave of retaliation hit. The relative stability is partly mechanical. Weekend liquidity is thin, and many leveraged positions that would reinforce a sell-off were already flushed during the week’s decline from $70,000.
But the real test will come when the traditional markets reopen on Monday. Bitcoin tends to absorb the first wave of geopolitical selling because it is the only major liquid asset that trades on a Saturday afternoon.
Stocks, oil and bonds do not have this option until futures Sunday night or Monday’s open. If these markets gap sharply lower, bitcoin could face another wave of risk selling as portfolio managers de-risk across all asset classes simultaneously.
That could potentially open a path to $60,000 or below.
Previous Middle East escalations have followed a pattern where bitcoin falls on the initial shock and recovers as traditional markets absorb the news and the situation appears to be contained. Iran’s retaliatory attack on Israel in April 2025 played out that way. So did earlier tensions in 2020.
This time the containment thesis is much harder to do. Missiles landing in Dubai, Kuwait and Bahrain are not a bilateral exchange. It is a regional war affecting some of the most economically sensitive territory on the planet.
Downside risk is straightforward. If the conflict widens, oil prices could rise on both sides of the Atlantic, potentially leading to global risk aversion and deeper losses in bitcoin. While the cryptocurrency is often seen as digital gold, it has historically traded more like a risk asset, not a safe haven.
The $60,000 floor that held during the February 5 crash will be the next line of defense, and it will be tested under far more severe conditions than a lever flush.
