US President Donald Trump’s recent threat to target Iranian power plants if Tehran does not reopen the Strait of Hormuz has had immediate consequences for the cryptocurrency market, notably driving Bitcoin prices back below the $70,000 mark. Experts warn that escalating conflicts in the Middle East could significantly impact Bitcoin and other cryptocurrencies, particularly amid fears of an impending global recession.
Georgii Verbitskii, founder of the crypto trading platform TYMIO, noted that any prolonged conflict in the region would likely be detrimental to Bitcoin’s value. He explained that disruptions to global trade routes generate heightened uncertainty in financial markets. This uncertainty tends to exert downward pressure on equities, and since Bitcoin has shown a strong correlation with risk assets—especially US stock indices—it is likely to experience similar declines when stock markets falter.
This warning follows reports of a “double-whammy” for risk assets, particularly in light of the Federal Reserve’s recent decision to maintain interest rates at its March meeting. David Lawant, head of research at Anchorage Digital, emphasized that the cryptocurrency market is not insulated from broader macroeconomic challenges.
Trump’s provocative remarks came shortly after he suggested a potential de-escalation of the situation. He stated on his Truth Social platform: “Within 48 hours from this exact point in time, the United States of America will hit and obliterate [Iran’s] various power plants, starting with the biggest one first.”
In response to Trump’s threats, Iranian officials have affirmed that the Strait remains open for maritime transport, albeit with restrictions for what they describe as “enemies.” As tensions heightened, missiles continued to fall in various regions of the Middle East, contributing to a decline in Bitcoin prices by approximately 3% within a 24-hour timeframe.
Han Tan, chief market analyst at Bybit Learn, indicated that the ongoing conflicts in the Middle East are the primary focus for traders, investors, and policymakers globally. Major central banks are increasingly voicing concerns over the uncertainty regarding the duration and intensity of the conflict, highlighting potential inflationary pressures resulting from rising oil prices.
For Bitcoin investors looking for a hedge against inflation, Tan cautioned that current circumstances may undercut those expectations. “The prudent stance is to withhold from prematurely according the safe haven title to Bitcoin just yet,” he stated, adding that the cryptocurrency has yet to demonstrate its effectiveness in this role.
Verbitskii echoed these sentiments, asserting that Bitcoin is not yet functioning as a distinct geopolitical hedge. The cryptocurrency continues to be heavily influenced by global liquidity conditions and movements within traditional financial markets, rather than acting independently in times of crisis.
