If Trump Launches an Attack on Iran, Will Bitcoin Be the First to Tumble?

▲ Middle East risk, gold, and Bitcoin / ChatGPT-generated image ©

If President Trump’s military strike on Iran becomes a reality, Bitcoin is likely to face a short-term plunge and an explosion in volatility before being tested on whether it should be viewed as a “risk asset” or a “digital safe-haven.”

According to the New York Times (NYT) on the 20th (local time), U.S. President Donald Trump is reviewing a potential military attack on Iran, and concerns are growing that if such an operation is carried out, the damage could be far more severe than last year’s “12-day war.” Currently, between 30,000 and 40,000 U.S. troops stationed at 13 bases across the Middle East are within Iran’s strike range. The U.S. Department of Defense is reportedly assembling its largest air force deployment in the region since the 2003 Iraq War.

The key variable is the scale of Iran’s retaliation. During last year’s “12-day war,” limited airstrikes were conducted after prior notice to the United States, but this time the possibility of a surprise response is being raised. Some analysts suggest that if Iran’s leadership views a U.S. attack as a direct threat to the regime’s survival, it could respond at an unprecedented level. In fact, Iran has warned that “all bases and assets of hostile forces in the region will become targets.”

Such geopolitical risks are highly likely to deliver an immediate shock to global financial markets. Typically, at the outbreak of war, capital flows into traditional safe-haven assets such as the U.S. dollar and gold, while risk assets like equities and cryptocurrencies tend to decline in tandem. If global liquidity tightens and oil prices surge, renewed inflation concerns could intensify, adding further selling pressure across risk assets.

However, the medium-term trajectory is difficult to predict. Bitcoin (BTC) has repeatedly rebounded quickly after sharp declines in the past. If a weaker dollar, expanding fiscal burdens, and expectations of monetary easing emerge simultaneously, the “digital gold” narrative could regain traction. Diverging flows between institutional and retail investors also remain a variable. Should a prolonged war increase U.S. fiscal strain and undermine confidence in the dollar, Bitcoin could be reevaluated as an alternative asset.

Ultimately, Trump’s military decision could serve as a catalyst for a broader reshaping of global asset markets beyond a regional Middle East conflict. In the short term, heightened volatility and risk aversion are likely to dominate, but depending on the intensity and duration of the conflict, Bitcoin’s identity could shift from a “risk asset” to a “hedge asset.” The market is now closely watching how military decisions may alter the financial landscape.

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