Bitcoin Holds Firm in the Midst of a War Crisis: What's Happening?

Geopolitical shocks continue to test the resilience of digital assets, and this week is no exception. As tensions between Israel and Iran escalate, the crypto market reacts to the sharp level of volatility. In just 72 hours, Bitcoin has lost 6% of its value, equivalent to more than $200 billion in market capitalization, leading to a wave of widespread concern in investor sentiment.

However, as the risk of widespread conflict subsides and the capital flow into ETFs remains stable, the market quickly regains its balance. Bitcoin is no exception to this trend, returning to the familiar pattern of the crypto market: a strong sell-off reaction when risks rise, followed by a rapid recovery shortly thereafter.

Market sentiment shakes because of geopolitics

The Israel-Iran conflict has caused a spike in social media discussions, and has led to a pronounced risk-averse reaction in the crypto market.

According to data from Santiment, mentions of "Israel", "Iran" and geopolitically related keywords surged during the period from June 12 to 15 – coinciding with a 4–6% drop in the price of Bitcoin and a $200 billion decline in total crypto market capitalization.

Source: SantimentSocial psychology turned extremely pessimistic during this period. However, like previous crises – including the Ukraine war in 2022, Bitcoin soon found an equilibrium, hovering around $104,000, thanks to steady ETF inflows and a temporary cooling of military tensions.

However, even when war developments dominate the news, the crypto market does not react as it used to during major crises. As Ray Youssef, CEO of NoOnes and former CEO of Paxful, shared:

"Typically, the market does not favor unexpected factors – but recently, crypto seems to be less reactive."

In fact, even when the hack worth 49 million dollars targeted the largest crypto exchange in Iran – Nobitex (, which was reportedly carried out by the Predatory Sparrow group), the market hardly showed any signs of fluctuation.

"Such an incident will often put the market on alert, especially when it comes to military cyber warfare units."

However, Bitcoin is almost unaffected, continuing to maintain around the level of 104,000 dollars with a daily fluctuation range of under 2.1% and no signs of a massive sell-off.

ETFs play a "lifeline" role

Even if the fear spreads, ETF capital flows act as a force to keep the market stable. The chart shows consecutive sessions with strong inflows – especially on June 9, 10 and 16.

During this period, the total net inflow value reached 216.48 million dollars, raising the total net assets of the ETF to 128.18 billion dollars.

Source: SoSoValueSteady capital flows have helped mitigate Bitcoin's decline and supported the subsequent rally. As in previous macro shocks, institutional participation through ETFs continues to act as an important buffer, helping to reduce volatility and affirm Bitcoin's increasingly pronounced maturity.

However, the price behavior of Bitcoin is increasingly resembling that of traditional tech stocks rather than a hedge asset. Youssef stated:

"Bitcoin now seems to no longer function as a risk hedge. Instead, it operates like a high-beta technology stock – swept along by macro factors, rather than navigating its own path."

This observation accurately reflects the reality as the current correlation coefficient between BTC and Nasdaq 100 reaches 0.68 – a number that indicates an increasingly deep connection between crypto and traditional risk assets.

The market is temporarily quiet but may not last long

Although Bitcoin is currently maintaining a relatively stable position, volatility may not necessarily be over.

Regional conflicts are still ongoing and Alphractal's On-Chain Capflow Sentiment index is approaching the distribution zone – which is usually a warning signal that selling pressure may increase.

Although the inflow into ETFs and solid fundamentals have helped BTC maintain its position, the market remains very sensitive to unexpected fluctuations from geopolitical events.

The larger macroeconomic risks still remain. Youssef warns:

"Ignoring escalating geopolitical tensions will not make them disappear...".

Source: AlphractalSince October 2025 is seen as a potential turning point for the macro economy, this calm period may only be temporary.

Minh Anh