The flames of war in Israel and Palestine have "burned" into the crypto market.

For the global Crypto Assets industry, geopolitical factors will become the absolute mainline for the short-term market, and risk aversion sentiments will greatly affect the trend of coins.

Written by: Tuo Luo Finance

In the past two weeks, the world's attention has been focused on the Middle East.

As the two most important powers in the Middle East, the conflict between Iran and Israel not only signifies a sudden disruption of the surface peace in the Middle East and a continuous escalation of chaos, but also further stirs up waves globally. From the current perspective, this war triggered by nuclear tensions not only plunges Iran and Israel into deep conflict, forcing a shift from proxy wars to direct confrontation, but also compels the United States to intervene rapidly, with the situation gradually escalating.

Under risk-averse sentiment, global markets have fallen into turmoil, with hard assets like gold and the US dollar rising rapidly, in contrast to the alarm in risk markets. It must be admitted that the flames of war between Israel and Palestine are also spreading to the Crypto Assets sector.

To discuss the recent Iran-Israel conflict, one cannot avoid the issue of Iran's nuclear program. In fact, Iran's nuclear program began earlier than one might think. As early as 1957, during the Cold War, in order to prevent Soviet influence from spreading south, the United States signed the "Civil Nuclear Cooperation Agreement" with the pro-American Pahlavi dynasty of Iran, marking the beginning of Iran's nuclear program.

In 1967, according to an agreement, the United States provided a 5 megawatt research nuclear reactor that was installed at Tehran University. In 1968, Iran signed the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), formally establishing its legitimate status in the international nuclear non-proliferation system for the peaceful use of nuclear energy. The oil crisis of the 1970s further catalyzed Iran's nuclear industry, relying on high-revenue oil exports. In 1974, Iran established the Atomic Energy Organization (AEOI) and began cooperating on nuclear technology with countries around the world. By 1979, with about 80% of the construction of the Bushehr Nuclear Power Plant's two reactors completed, Iran had initially established a relatively comprehensive nuclear industry system.

The turning point occurred in the Islamic Revolution in Iran. After the revolution, Iran moved from a secular absolute monarchy to a theocratic state, marking the end of the honeymoon period between the United States and Iran. Ayatollah Khomeini's regime is completely anti-American, the United States has also designated Iran as a blockade zone, and the nuclear program, a hallmark of U.S.-Iranian cooperation, has fallen silent. In the aftermath of the Iran-Iraq war, Khomeini realized the importance of modernizing the military system and began to embrace the Soviet Union and other countries, signing the Agreement on the Peaceful Uses of Nuclear Energy with Russia in 1992, which led to intensive cooperation between the two countries.

Since 2002, when the Iranian nuclear issue was first exposed by the international community, Iran has engaged in numerous multilateral negotiations with other countries on the nuclear issue in the following decade. In 2015, Iran signed the Joint Comprehensive Plan of Action (JCPOA) with the United States, the United Kingdom, France, Germany, Russia, and China, which temporarily froze its uranium enrichment activities and eased Western sanctions. But then Trump's rise to power made the war confusing again, and the United States unilaterally withdrew from the agreement in 2018 and reimposed crippling sanctions. As a result, Iran has taken a more proactive approach to the nuclear industry, and in 2023 it successfully deployed IR-6 centrifuges, which are 5 times more efficient than during the agreement, and according to the latest data from 2025, the International Atomic Energy Agency (IAEA) report shows that Iran has accumulated 408 kilograms of 60% enriched uranium, approaching the threshold of weapons-grade nuclear materials.

In April this year, the Trump administration announced it would resume nuclear negotiations with Iran, but in early June, on June 12, 2025, the United Nations nuclear watchdog, the International Atomic Energy Agency (IAEA), formally recognized that Iran had not complied with its nuclear obligations, leading to a breakdown in negotiations and a rapid deterioration of the situation in the Middle East. Among all this, Israel became the most restless country.

The conflict between Israel and Iran has a long history, with the absolute opposition of religious ideologies determining the unavoidable confrontational backdrop between the two. Moreover, the competition for geopolitical influence and hegemony has caused this conflict to spiral upward. On one hand, Iran is building a Shiite crescent to encircle Israel, while on the other hand, it is escalating its nuclear technology. Israel, already lacking strategic depth, is frantically retaliating under survival anxiety, with America's tacit support making Israel feel invincible. Israel and Iran are showing a posture of mutual resistance in various aspects, and their proxy wars have become a fundamental aspect of the Middle East situation in recent years. However, this time, the proxy wars buried in the shadows have rapidly transformed into a mode of direct confrontation.

On June 13, local time, the Israeli Air Force launched a public airstrike on dozens of nuclear facilities and military targets within Iran, codenamed "Operation Lion's Strength." Iran was not to be outdone and carried out a series of missile and drone attacks against Israel. Subsequently, both Israel and Iran intensified their attacks on each other, and the international community intervened. In fact, looking back at the timeline of the Israel-Iran conflict, the United States can be considered the instigator. Due to deep-seated contradictions between the U.S. and Iran regarding geopolitical issues, ideology, historical grievances, and regional hotspots, the U.S. has chosen to support Israel to curb Iran's development. In this conflict, the U.S. publicly proclaimed peace negotiations and non-intervention while simultaneously directing the U.S. military to destroy three Iranian nuclear facilities on June 21. This not only further increased the likelihood of escalation in the conflict but also significantly complicated the situation, thereby threatening global security.

Geopolitics has always been a core focus of the global financial markets, and the impact of the U.S. entering the scene is continuing to amplify. In response to this move by the U.S., Iran has proposed to close the Strait of Hormuz, which handles about one-third of the world's maritime oil trade, triggering global panic. Just today, international crude oil futures opened up more than 5%, and international gold prices briefly exceeded 3400 dollars.

The risk market is not so good. With the intensification of risk aversion, the futures of the three major U.S. stock indexes opened lower, and the crypto market suffered a heavy setback. In the past three days, the crypto market has fallen continuously, yesterday Bitcoin fell below the 100,000 mark, the lowest touched $98,000, and is now trading at $101961, the copycat plate has plummeted, ETH is back above $2,200, and SOL has come to $130 again. According to Coinglass, as of 9 a.m. this morning, about $559 million has been liquidated on the entire network in the past 12 hours, with $452 million in long orders and $107 million in short positions. Among them, Bitcoin liquidated $223 million, and Ethereum liquidated $156 million.

On the other hand, the flames of war between Israel and Iran have not only ignited risk aversion in the Crypto Assets market but have also rapidly spread to the domestic Crypto Assets industry. On the afternoon of June 18, the mysterious hacker organization Gonjeshke Darande claimed to have launched a large-scale attack on the Iranian Crypto Assets trading platform Nobitex, successfully obtaining its source code, internal network data, and customer asset data. As of now, nearly 90 million dollars' worth of Crypto Assets have been affected, most of which are stablecoin USDT. It is worth noting that even though the trading platform has been compromised, on-chain data shows that most of the funds have not been transferred but rather directly destroyed, which seems more like a form of protest.

The hacker explicitly mentioned the reasons for the attack, stating that "Nobitex exchange is at the core of the Iranian regime's funding of global terrorism activities, and collaborating with the infrastructure that the Iranian regime uses to fund terrorism and violate sanctions will put your assets at risk." Although the hacker group has never revealed its identity, many experts in the industry believe that, given its precise strikes against Iran multiple times from 2022 to the present, it is likely affiliated with Israel's military intelligence unit, the famous Unit 8200.

It must be acknowledged that the hackers' strikes are quite precise, and this action has indeed obstructed the flow of funds between Iran and the outside world. After suffering from sanctions and inflation for many years, the local encryption industry in Iran has developed quite rapidly. According to data provided by Maria Noor, there are currently 90 Crypto Assets exchanges operating in Iran, of which more than 10 operate as centralized exchanges, offering websites and applications for users. Approximately 15 to 19 million Iranians are active in the Crypto Assets market, accounting for about one-fifth of Iran's total population. It is evident that the Crypto market has become one of the important channels for Iran to conduct transactions with the outside world.

Nobitex, which was attacked this time, is the largest exchange in Iran, with 6 million active users and an annual trading volume of up to 68 million transactions, with a market share of nearly 87%. Reuters has previously reported on this project, stating that the vast majority of domestic encryption trading in Iran is connected to the international market through Nobitex or similar exchanges.

In addition to Crypto Assets, the Iranian government has also invested significantly in the industrial application of blockchain technology, having launched official blockchain projects Kuknos and Borna to promote the improvement and efficiency of financial infrastructure. Despite supporting blockchain technology, the Iranian government's attitude towards the continuously developing trend of Crypto Assets in the local area can be described as quite subtle.

First of all, in the field of mining, Iran's attitude is very ambiguous. In contrast to other regions, where mining farms are overwhelmingly dominant, Iran's mining industry is dominated by retail investors. In 2018, Iran became a popular global mining destination by legalizing the mining industry, attracting a wide range of miners to pan for gold in the region. Under the rigid demand of transactions, local retail mining is not uncommon. Some 300 mining projects have been approved by the government, but according to Masih Alavi, CEO of ViraMiner, the legal mining scale in Iran is only 5 megawatts, while the underground scale of illegal mining is close to 2GW, which is 400 times that of legal mining, which is equivalent to 5% of Iran's total electricity consumption in 2023, according to Wu said. In 2020, Iran's central bank announced a ban on the use of illegal mining currencies in the territory of individuals, and in December 2024, the government explicitly banned the promotion of crypto mining machines.

The negative attitude is more thoroughly reflected in the trading side of Crypto Assets. In response to the encroachment of Crypto Assets on the sovereignty of official currency, Iran has taken strong measures, attempting multiple times to block the exchange between Crypto Assets and the rial, and restricting the outflow of local funds. At the beginning of this year, the Central Bank of Iran temporarily stopped all rial payments for Crypto Assets exchanges, requiring all exchanges to use government-designated interfaces for transactions to achieve fund tracking and user monitoring. In February, Iran explicitly prohibited any local advertising of Crypto Assets. After Nobitex was attacked, the Central Bank of Iran even introduced a curfew policy for Crypto Assets, strictly regulating that domestic Crypto platforms can only operate between 10 AM and 8 PM.

The various restrictions and regulations reflect the official's apprehension towards Crypto Assets. On one hand, under the current conditions of isolation, Crypto Assets are an important means for the development of local industries and acquiring foreign exchange, serving as an important trading window for Iran. Objectively, there is significance to their existence. On the other hand, due to the impact of Crypto Assets on monetary sovereignty and the electricity losses in the mining industry, the authorities cannot allow it to develop freely and must attempt to find a balance between innovation and regulation. This point also reflects in the religious domain; in Iran, where religious authority is highly centralized, speculation-driven Crypto Assets inherently carry a taboo nature. Traditional religious conservatives are quite averse to them, yet Iran's Supreme Leader Khamenei believes in maintaining a progressive attitude. The open and conservative factions also maintain a delicate balance on this issue.

Of course, whether acceptance or opposition, judging from the current situation, the flames of the Israel-Iran war have clearly spread from the physical space to the cyberspace and further into the financial sector. As part of this, the encryption field can only be forced to face this impact. For Iran, the attack on exchanges may just be the beginning; the subsequent game between the two will only present more complex, more sophisticated, and more subtle characteristics.

For the global Crypto Assets industry, geopolitical factors will become the absolute mainline for the short-term market, and risk aversion sentiment will greatly influence the trend of Crypto Assets. Currently, due to frequent positive news within the industry, the sentiment remains relatively mild, and market fluctuations are also relatively controllable. Bitcoin is strongly supported at $98,000, and there is a trend of BTC exiting exchanges. Additionally, last week saw a net inflow of $1.02 billion into Bitcoin ETFs, which shows that the market still holds a positive attitude toward Bitcoin. However, the involvement of the United States brings high uncertainty, and the scope and degree of its involvement will have a wide impact on the battlefield. If it leads to the closure of the Strait of Hormuz, the market will face even greater fluctuations.

Moreover, it is worth noting that as the conflict causes oil prices to soar, the Federal Reserve, which has been wavering between tariffs and inflation, will open a longer observation window. Maintaining high interest rates in the third quarter is gradually becoming a market consensus, and this move will have a more profound impact on the Crypto Assets market.