Over the past two weeks, the world's attention has been focused on the Middle East.
As the two most powerful countries in the region, the conflict between Israel and Iran not only signifies the sudden disruption of the fragile peace in the Middle East, but also the escalating chaos, further triggering a global storm. From the current perspective, this war, sparked by nuclear issues, has not only drawn Iran and Israel into direct conflict, but also forced the United States to intervene rapidly, and the situation is expanding.
Amid heightened risk sentiment, global markets have plunged into turmoil, with hard assets like gold and the US dollar rising quickly. In contrast, risk markets are in disarray. It must be acknowledged that the Israel-Iran conflict is also spreading into the crypto space.
To discuss the current Israel-Iran conflict, we must address the Iran nuclear issue. In fact, Iran's nuclear program dates back further than expected. As early as 1957, during the Cold War, the United States signed a "Civil Nuclear Cooperation Agreement" with the pro-American Pahlavi dynasty of Iran to prevent Soviet influence from spreading southward. This marked the beginning of Iran's nuclear program.
In 1967, under the agreement, the United States provided Iran with a 5-megawatt research reactor, which was installed at Tehran University. In 1968, Iran signed the "Nuclear Non-Proliferation Treaty" (NPT), officially establishing its legitimate position within the international nuclear non-proliferation framework for peaceful nuclear energy use. The 1970s oil crisis further accelerated Iran's nuclear industry, leveraging high revenue from oil exports. In 1974, Iran established the Atomic Energy Organization of Iran (AEOI) and began cooperating with countries worldwide on nuclear technology. By 1979, as two reactors at the Bushehr Nuclear Power Plant were 80% complete, Iran had established a relatively comprehensive nuclear industry.
A turning point came after the Iranian Islamic Revolution. Following the revolution, Iran transitioned from a secular monarchy to a theocratic state, marking the end of its honeymoon period with the United States. The Khomeini regime became fully anti-American, and the U.S. placed Iran under sanctions, with the nuclear program, which had been a symbol of U.S.-Iran cooperation, fading into silence. After the Iran-Iraq War, Khomeini realized the importance of modern military systems and sought support from the Soviet Union and other countries, leading to the signing of the "Peaceful Use of Nuclear Energy Agreement" with Russia in 1992, marking the beginning of intense cooperation.
Since Iran's nuclear issue was first exposed to the international community in 2002, Iran has engaged in several rounds of multilateral negotiations with other countries over the years. In 2015, Iran signed the Joint Comprehensive Plan of Action (JCPOA) with the U.S., U.K., France, Germany, Russia, and China, temporarily freezing its uranium enrichment activities and leading to the relaxation of Western sanctions. However, the situation became murkier with the ascension of Trump, who unilaterally withdrew from the agreement in 2018 and re-imposed severe sanctions. In response, Iran adopted a more proactive nuclear strategy and successfully deployed the IR-6 centrifuge in 2023, which has a five-fold higher enrichment efficiency than during the agreement period. According to the latest data from the International Atomic Energy Agency (IAEA) in 2025, Iran has accumulated 408 kilograms of 60%-enriched uranium, nearing the threshold for weapons-grade material.
In April of this year, the Trump administration announced that nuclear talks would resume. However, in early June 2025, on June 12, the IAEA formally declared that Iran had violated its nuclear obligations, resulting in a breakdown of the negotiations and a sharp deterioration of the Middle East situation. In this context, Israel became the most restless country.
The tension between Israel and Iran has a long history, and the absolute ideological opposition based on religious beliefs makes confrontation inevitable. Geopolitical struggles and the quest for hegemony have only escalated the conflict. Iran, on one hand, is constructing a Shia arc to surround Israel, while on the other hand, it is advancing its nuclear technology. Israel, with its limited strategic depth, has been escalating attacks under survival anxiety, and U.S. tacit support has emboldened Israel. The conflict has escalated to a proxy war in recent years, but this time, the proxy war has quickly escalated into a direct confrontation.
On June 13, local time, the Israeli Air Force launched a public airstrike on dozens of nuclear and military targets inside Iran, codenamed "Lion's Strength." Iran responded with a series of missile and drone attacks on Israel. The two countries have since intensified their attacks, and the international community has intervened. In fact, looking back at the timeline of the Israel-Iran conflict, the U.S. is arguably the main instigator. Due to deep contradictions between the U.S. and Iran on geopolitical, ideological, historical, and regional issues, the U.S. has supported Israel to contain Iran’s development. In this conflict, the U.S. publicly declared its support for peace talks and non-intervention while covertly instructing U.S. forces to destroy three of Iran's nuclear facilities on June 21, further escalating the conflict and significantly increasing its complexity, thereby threatening global security.
Geopolitics has always been a key focus of the global financial market, and with the U.S. involvement, the shockwave is intensifying. In response to the U.S. move, Iran has proposed closing the Strait of Hormuz, which handles about one-third of global seaborne oil trade, sparking global panic. As of today, international oil futures opened up more than 5%, and international gold prices once broke $3,400.
Risk markets are also facing a tough time. With increasing risk sentiment, U.S. stock futures opened lower, and the crypto market was severely hit. Over the past three days, the crypto market has continued to decline, with Bitcoin breaking below $100,000, touching a low of $98,000, and now reported at $101,961. Altcoins have dropped sharply, with ETH returning to above $2,200 and SOL dropping again to $130. According to Coinglass, as of 9 AM today, approximately $559 million in liquidations occurred across the entire network in the last 12 hours, with long liquidations totaling $452 million and short liquidations at $107 million. Among them, Bitcoin liquidations totaled $223 million and Ethereum liquidations totaled $156 million.
On the other hand, the Israel-Iran conflict, besides fueling the risk sentiment in the crypto market, has also rapidly spread into the domestic crypto industry. On the afternoon of June 18, the mysterious hacker group Gonjeshke Darande claimed to have launched a large-scale attack on the Iranian cryptocurrency exchange Nobitex, successfully obtaining its source code, internal network data, and customer asset data. As of now, nearly $90 million in crypto assets have been affected, most of which are stablecoins (USDT). Notably, although the exchange was controlled, most of the funds have not been transferred but instead directly destroyed, indicating that this could be a form of protest.
The hacker explicitly mentioned the reason for the attack, stating that "Nobitex is a core platform funded by the Iranian regime to finance global terrorism activities. Collaborating with the Iranian regime’s infrastructure that funds terrorism and violates sanctions will put your assets at risk." Although the identity of the hacker group has never been disclosed, based on their precise strikes against Iran from 2022 to the present, many experts believe that this group is affiliated with the Israeli military intelligence unit 8200.
It must be acknowledged that the hacker's strike was highly targeted, and indeed, it has hindered the flow of funds between Iran and the outside world. Over the years, Iran’s crypto industry has developed quite rapidly due to years of suffering from sanctions and inflation. According to data provided by Maria Noor, Iran currently operates 90 cryptocurrency exchanges, with more than 10 operating as centralized exchanges, providing websites and applications for users. Approximately 15 to 19 million Iranians are active in the cryptocurrency market, accounting for about one-fifth of the country's total population. This highlights the importance of the crypto market as a significant channel for trade between Iran and the outside world.
Nobitex, the exchange attacked, is the largest exchange in Iran, with 6 million active users and an annual trading volume of 68 million transactions, capturing nearly 87% of the market share. Reuters previously reported that most of Iran’s domestic crypto trading connects with international markets through Nobitex or similar exchanges.
In addition to cryptocurrency, the Iranian government has also made significant investments in blockchain technology, launching official blockchain projects Kuknos and Borna to improve financial infrastructure efficiency. Although supportive of blockchain technology, the Iranian government's attitude towards the continued development of cryptocurrency within the country is quite nuanced.
In the mining sector, Iran’s stance is particularly ambiguous. Unlike other regions where mining is predominantly controlled by large-scale operators, Iran’s mining industry is led by individual miners. In 2018, Iran legalized mining to attract miners, quickly becoming a hotspot for mining globally. However, issues have arisen due to insufficient electricity infrastructure. According to data, about 300 mining projects were approved by the government, but according to ViraMiner’s CEO Masih Alavi, Iran’s legal mining capacity currently stands at only 5 MW, while illegal mining underground exceeds 2GW, 400 times that of legal mining, accounting for 5% of Iran’s total electricity consumption in 2023. As a result, Iran has imposed stricter restrictions and a reduction on the industry.
This situation has led to a crackdown on crypto mining, with the central bank announcing in 2020 that individuals can no longer use illegally mined coins for transactions. In December 2024, the government officially banned cryptocurrency mining advertisements. Although no further action has been taken yet, it is clear that the government’s attitude is not supportive.
The government’s opposition is most evident in the crypto trading sector. Facing the erosion of the official currency’s sovereignty by cryptocurrencies, Iran has taken strong actions, repeatedly attempting to block the conversion of cryptocurrency and the rial, restricting local capital outflows. Earlier this year, the Central Bank of Iran stopped all cryptocurrency exchanges from using rial for payments and required them to use government-designated interfaces for transactions to enable tracking of funds and users. In February, Iran explicitly banned any crypto ads from being shown locally. After the attack on Nobitex, the Central Bank of Iran implemented a crypto curfew, allowing local crypto platforms to operate only between 10 AM and 8 PM daily.
Various restrictions and regulations indicate the government's cautious attitude toward cryptocurrency. On one hand, under the current blockade, cryptocurrency serves as an important channel for the domestic industry’s development and acquiring foreign exchange, playing a vital role in Iran’s foreign trade. On the other hand, due to the impact of cryptocurrency on monetary sovereignty and the electricity losses caused by mining, the government cannot allow it to develop unchecked and must attempt to find a balance between innovation and regulation. This also reflects the religious context in Iran, where speculative cryptocurrencies naturally carry a taboo due to the centralized religious governance, with traditional religious conservatives strongly opposing them. However, Iran's Supreme Leader Khamenei believes that the country should stay current and progressive, and there is a delicate balance between the open and conservative factions on this issue.
Of course, whether accepting or opposing, it is clear that the flames of the Israel-Iran war have already spread from the physical world to cyberspace and further into the financial sector, with the crypto sector being one of the impacted areas. For Iran, the exchange attack may just be the beginning, and the ongoing game between both sides will only become more complex, sophisticated, and invisible.
For the global crypto industry, geopolitics will become the absolute focus of the market in the short term, and risk sentiment will significantly affect the price movements of cryptocurrencies. Currently, due to frequent positive industry news, the sentiment remains relatively mild, and market fluctuations are still controllable. Bitcoin's support at $98,000 is solid, and BTC is leaving the exchanges, with Bitcoin ETF seeing a net inflow of $1.02 billion last week, showing positive market sentiment. However, the uncertainty brought by the U.S. involvement will have broad impacts on the battlefield, and if the U.S. leads to the closure of the Strait of Hormuz, the market will face greater fluctuations.
Additionally, with the rapid rise in oil prices due to the conflict, the U.S. Federal Reserve, already struggling with tariffs and inflation, will likely maintain high interest rates through Q3, which will have a deeper impact on the crypto market.