For the past six weeks, a war has quietly changed the financial world. The United States and Israel have been conducting air strikes against Iran since late February. Iran responded by closing the Strait of Hormuz, one of the world's most important shipping routes. Oil prices surged. Stock markets became volatile. And Bitcoin? Made a move that says a lot about the current role of crypto.
In this article, we explain what exactly is happening, why this matters to your wealth and what different scenarios could mean for Bitcoin and other cryptocurrencies.
For a comprehensive analysis and our previous expectations, please see our March 26, 2026 article:
'Bitcoin update: First recovery phase targeted at $100,000'
image_here
What exactly happened?
On Feb. 28, 2026, U.S. and Israeli attacks on Iran began. Iran struck back by blocking the Strait of Hormuz, a narrow passage through which about one-fifth of the world's oil supply passes. Compare it to a traffic jam on the world's main highway. As a result, oil prices rose from about $65-70 a barrel to above $100.
Higher oil prices increase costs in almost all sectors: transportation, food and energy. This drives up inflation. And when inflation rises, central banks keep interest rates high or even raise them. High interest rates make borrowing more expensive and cause less money to flow into risky investments, such as stocks and crypto.
A temporary truce: effect on markets
On April 7, President Trump announced a two-week truce. Iran agreed to temporarily reopen the Strait of Hormuz, while peace talks were planned in Islamabad. The market reaction was immediate and substantial.
Bitcoin rose from about $68,500 to $72,700 (+5%) and Ethereum from about $2,100 to $2,273 (+7.5%). At the same time, the price of oil fell from about $109 to $95 (-13%).
Within hours, nearly $600 million in short positions were wiped out. Still, the optimism did not last long. Peace talks failed on April 12 after 21 hours of negotiations, with no agreement on Iran's nuclear program or control of the strait.
Bitcoin fell again toward $71,000 and is currently trading around $74,500. Higher than before the truce, but uncertainty remains high.
Why does a war in the Middle East affect Bitcoin?
This is the key question, and the answer surprises many investors.
Bitcoin was originally designed as "digital gold": a secure store of value independent of governments and central banks. In that vision, a war should actually make Bitcoin more attractive.
The reality in 2026 is different. Bitcoin today is largely owned by large institutional investors, such as banks and hedge funds. These parties manage their risks across the portfolio. When markets fall and uncertainty increases, they often sell Bitcoin as well to reduce risk.
The result: Bitcoin currently moves largely with the Nasdaq and other technology stocks.
How does oil affect crypto? Simply explained
Rising oil price → higher inflation → central banks keep interest rates high
High interest rates → safe investments become more attractive → sell risky assets
Risky assets fall → stocks fall → Bitcoin falls with them
Falling oil price → lower inflation → chance of interest rate cut
Lower interest rates → more money to risky investments → crypto rises
Still, there is nuance. In countries with weak currencies or limited access to financial systems, some investors are stepping into Bitcoin precisely because of geopolitical uncertainty. This creates a dichotomy: institutional selling versus defensive inflows. This explains why Bitcoin has fallen less than expected.
What are the possible scenarios?
The current truce expires around April 22. Neither side has yet confirmed whether it will be extended.
Scenario 1: Peace.
Talks succeed and the ceasefire remains in effect.
Oil falls toward $80-85. Inflation declines and interest rate cuts approach. Bitcoin may rise toward $80,000 or higher. Altcoins are likely to react even more strongly.
Scenario 2: Escalation.
Truce breaks and conflict flares up again.
Oil rises above $105. Inflation remains high and interest rate cuts are delayed. Bitcoin may fall back toward $68,000 - 70,000. Further escalation may even test the $65,000 zone.
What does this mean for you as an investor?
The reality is that no one knows how this war will end. What is clear, however, is that the relationship between geopolitics and crypto has fundamentally changed.
Bitcoin is no longer a niche asset, but part of the global financial system. That means it is affected by the same factors as stocks, bonds and commodities.
This does not mean that crypto loses its long-term potential. It does mean that in the short term, geopolitical news can be just as important as technological developments within the sector.
For long-term investors, periods of uncertainty historically often present opportunities. For short-term traders, it is important to consider multiple factors at once, such as the end of the truce, political decision-making and interest rate decisions.
A war always ends. The question is when and what the world looks like after that.
Disclaimer: Investing involves risk. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips on this website are based on our analysts' own insights and experiences. They are therefore for educational purposes only.