How Would Bitcoin and Crypto Market React if US Enters the Israel-Iran War?

The recent airstrike on Tehran has fueled the Israel-Iran war, impacting the broader crypto market and Bitcoin. Such geopolitical events deeply impact investors’ sentiments, so the digital assets suffer. Now, further concerns are building about the escalation of the war, especially as the US hints at intervening. Let’s discuss. 

Crypto Market Crashes With Israel-Iran War Updates

With the escalation of the Israel-Iran war, the citizens are fleeing the most impacted cities like Tehran, Tel Aviv, and others. The  US has already evacuated its citizens from Israel and Iran. Amid this, the crypto market crashed, losing billions in liquidation, as the Bitcoin price plummeted below $103k, Ethereum moved down $2.4k, and the rest of the crypto tumbled as well.

Although the experts anticipated a short-term impact, the downtrend continues. This is due to the possibility of the US entering the Israel-Iran war, as they have a deep alliance with Israel, and also have troops and interests in the region.

Moreover, it could be a part of a long-standing effort to stop Iran from developing nuclear weapons and maintain geopolitical balance.

Iran vows retaliation if the U.S. joins Israel’s attack; they would not stand back and would act accordingly in self-defense. Moreover, Iran has claimed not to negotiate under any threat of bombardment.

US May or May Not Enter Israel-Iran War

President Donald Trump has been quite active on this matter but has not ruled out a strike on Iran yet, adding, “I may do it. I may not do it.” He cites that he understands the conditions of the Middle East war and people’s fear, but also insists that “Iran can’t have a nuclear weapon.”

The recent White House report reveals that the President will make the decision on the matter in the next 2 weeks. The market experts believe the odds of US involvement are higher, as Polymarket bets hit 69% earlier in yes, currently at 40%.

Bitcoin and Crypto Market Crash to Extend if the US Joins the Israel-Iran War

The Geopolitical conditions are not the very best in the present scenario. Starting with the Middle East war, continuity of the Russia-Ukraine war, the seized India-Pakistan war, and other macroeconomic events like Trump’s trade implementation have affected the crypto market significantly this year.

The US involvement could worsen these market conditions depending on the level of intervention and investor sentiments around it.

Short Term Impact

In the short term, the US involvement in the Israel-Iran conflict will result in a massive crypto market crash, as short sells would form. The Bitcoin price could drop nearly 10-20%, crashing altcoins and the rest of the market amid panic and risk-off sentiments.

Similar to recent reactions, the investors may shift to USD, gold, and safe-haven assets, worsening the crypto’s performance. While it’s a crash, the oil price would rise, and the Fed would delay the rate cuts, further impacting crypto valuations.

Mid-to-Long Term Impact

The short-term impact is a crash, but a mid-term scenario could bring recovery. If the ceasefire is initiated, the crypto market and Bitcoin price would recover in 4-6 weeks. Some experts even believe the digital assets could flourish backed by historical data.

🚨WW3 MIGHT HAS STARTED TODAY

Israel just bombed Iran’s nuclear sites

Most think it will KILL crypto, but they are WRONG

Here’s why war might pump BTC and when to buy the dip👇🧵 pic.twitter.com/wbjnuiefcz

— Atlas (@crptAtlas) June 13, 2025

In most geopolitical conditions, including the Ukraine invasion, BTC recovered faster than other equities. The same is not exactly true for Ethereum and altcoins, as they may underperform and take longer recovery times.

If the war escalated for long periods, the liquidity could erode, prices could collapse, and overall, the institutional flows would decline. However, another possibility is that the market would settle and barely react as the investors’ sentiments stop getting affected. Overall, the uncertainty would be higher, but the end result would be bullish.

 So, investors must watch the oil price movement and global inflation. Additionally, the crypto exchange flows and leverages data, Bitcoin correlation to gold, and other key metrics should be watched to build the best strategies.

What Else Threatens the Crypto Market Today?

Geopolitical events are not the only cause for the market and Bitcoin price slump these days. The Fed has kept the interest rate unchanged, so the market uncertainty is building.

The 90-day US tariff pause is also near its end, as the deadline is July 9. This poses a risk, affecting investors’ trade strategies. Not to forget the rising crypto scams and cyberattacks, including Iran’s Nobitax exchange hack.

All these macro and micro events are taking a toll on investors’ trading decisions. As a result, the volatility is high, and the crypto assets are suffering.