Bitcoin's Expected Reaction to Escalating Conflict
Bitcoin has reacted as expected to the conflict between the United States and Iran, continuing a pattern observed during previous geopolitical escalations. Crypto prices are digesting the latest developments, with analysts comparing the current price structure to similar moments in 2022 and 2023, when Bitcoin initially sold off before staging strong recoveries.
War Headlines and the 20%-40% Rally Pattern
Recent geopolitical tensions are arriving at an already fragile period for the crypto market. Bitcoin is down 48% from its all-time high and on track to close its fifth consecutive red monthly candle. The leading cryptocurrency has recorded its worst start to the first two months of a year, falling 24% since January, with February closing 14.8% below its open—the third-worst February in Bitcoin’s history, surpassed only by 2014 and 2025.
Crypto analyst Ted Pillows shared a weekly chart depicting Bitcoin's behavior during previous diplomatic escalations. In February 2022, amid Russia’s attack on Ukraine, Bitcoin dropped before rallying approximately 40% in the following months. In June 2025, after Israel attacked Iran, Bitcoin was initially sold off but later recovered about 25%. Now, following US strikes on Iran on Saturday, Bitcoin has once again reacted to the downside, raising the question of whether the same post-shock recovery pattern will repeat.
Another analyst, Sherlock, focused on shorter-term reactions, noting that during past US or Israeli strikes on Iran, Bitcoin typically fell sharply over the weekend and recovered within 24 to 48 hours. Examples include an 8% overnight drop in April 2024 after Iran struck Israel, erased within two days; a 3% drop in October 2024 recovered in 24 hours; and a 6% decline in June 2025 after US strikes, followed by a 62% rally to new all-time highs over two months. Notably, initial moves lower occurred before traditional financial markets reopened.
Market Already Deeply Corrected
The current setup differs from prior episodes, as Bitcoin was in a strong uptrend during the 2025 geopolitical shock, whereas today it has been in a prolonged drawdown for five months. Bitcoin’s weekly RSI is at the lowest level in its history, the Fear & Greed Index has remained in extreme fear for 22 consecutive days, and open interest is at low readings amid heavy deleveraging.
Panic selling in previous instances followed the geopolitical event itself, but this time much of the forced selling and deleveraging occurred beforehand. With weak hands largely exited and excess leverage cleared, Bitcoin may not sustain prolonged downside from the tensions and could stabilize sooner than in past episodes.
