The Middle East conflict has temporarily ceased, and Bitcoin has returned to $105,000: the narratives of "risk assets" and "digital gold" clash once again.

From Conflict to Easing: A Review of the Market's Turmoil on the 12th

The story begins on June 13, 2025. Israel launched its largest airstrike against Iran in decades under the military operation codenamed "Lion's Rise," instantly igniting panic in global markets. Iran's missile retaliation further escalated tensions, causing the Global Geopolitical Risk Index (GPR) to soar to 158 in a short time, hitting a peak not seen since early 2024.

The market reaction is a textbook "Risk-Off" mode. Capital has rapidly flowed into traditional safe havens—gold, the US dollar, and US Treasury bonds. Meanwhile, the cryptocurrency market, as a representative of risk assets, has suffered heavy losses. The price of Bitcoin has fallen below the $100,000 threshold, triggering a massive wave of leveraged liquidations. According to AiCoin data, the total liquidation amount across the network reached $1.16 billion within 24 hours, with over 250,000 investors forced to exit, resulting in a brutal long squeeze in the market.

During the conflict, former U.S. President Trump's tough statements, especially the suggestion of a possible closure of the Strait of Hormuz, became a Damocles sword hanging over the market. As a vital artery for global oil transportation (carrying 20% of the world's volume), any threat of disruption is directly related to global inflation expectations and the monetary policy path of the Federal Reserve, further suppressing the valuations of risk assets.

The turning point occurred on June 24. Trump announced via social media that, with the joint mediation of the United States and Qatar, Israel and Iran had reached a "comprehensive and complete" ceasefire agreement. As soon as the news broke, the tense nerves of the market relaxed instantly.

Risk appetite returns: capital flowing from gold to Bitcoin?

The ceasefire agreement has become a direct catalyst for the rebound in the cryptocurrency market.

On June 24, during the Asian trading session, market sentiment quickly shifted from panic to greed. Bitcoin led the rally, rising 4.5% within 24 hours, strongly breaking through $106,000. Major altcoins like Ethereum and Solana performed even better, recording gains of 5%-7%. The total market capitalization of the crypto market rebounded by about 3% in one day, approaching the $3 trillion mark again. Market sentiment on social media quickly turned optimistic, with "Risk-On" becoming a buzzword.

The core logic of this rebound is the rapid decline of geopolitical risk premium.

Capital rotation: As the GPR index declines, the previously influxed risk-averse funds into gold and the US dollar begin to seek higher returns, with Bitcoin becoming one of the main targets for absorbing this liquidity.

Derivatives Market: The funding rate of Bitcoin perpetual contracts has turned from negative to positive, indicating that market sentiment has shifted from bearish to bullish, with bullish forces regaining dominance.

Institutional Confidence: According to data from Farside Investors, the US spot Bitcoin ETF has resumed a continuous net inflow mode after the ceasefire news was announced, accumulating $1.3 billion in the past five trading days. ETFs are the most direct window to observe the flow of institutional funds, and their performance confirms that "smart money" is re-entering the market.

André Dragosch, Head of Research at Bitwise, analyzed this by stating: "Bitcoin is highly correlated with macro liquidity and market sentiment. This event clearly demonstrates its characteristics as a 'global risk sentiment barometer.' The ceasefire agreement has eliminated the greatest uncertainty in the short term, and the recovery of risk appetite is the fundamental driving force behind the price's return."

The Deep Game Behind the Ceasefire: Reaffirmation and Challenge of the Bitcoin Narrative

This roller coaster market is not only a price correction but also a stress test for the dual narratives of Bitcoin.

Initially, the decline of Bitcoin during the early stages of the conflict reinforced its attributes as a "risk asset." In the extreme panic of liquidity exhaustion, investors tend to indiscriminately sell all non-US dollar assets for cash, and Bitcoin's performance is highly correlated with the NASDAQ index.

Mithil Thakore, co-founder of Velar, pointed out: "In the moment of a crisis, liquidity is king. The high liquidity of Bitcoin makes it one of the preferred options for investors to cash out, which explains why it dropped ahead of the risk-off narrative taking effect."

However, the strong rebound after the ceasefire partially confirms its narrative logic of "digital gold" and "anti-inflation". Thakore added, "Geopolitical conflicts will drive up defense spending and disrupt supply chains, which will inevitably lead to higher inflation in the long run. As an asset with a constant supply, Bitcoin’s value proposition to hedge against sovereign currency overissuance has been repeatedly mentioned in the context of conflict. Once market panic subsides, this narrative will attract long-term investors to position themselves."

It is worth noting that the hacking incident of Iran's largest cryptocurrency exchange Nobitex during the conflict also revealed the vulnerabilities of centralized platforms in geopolitical games, which in turn highlighted the resilience of Bitcoin's decentralized network.

Market Outlook: Key Resistance Levels and Macroeconomic Variables

Although the ceasefire agreement has injected a dose of optimism into the market, the road ahead is not smooth. Investors need to closely monitor the following key variables:

Technical aspect: Bitcoin has risen back to $105,000, with the next key resistance level looking towards the previous high area of $108,000. If it can effectively break through, it is hoped to open up new space towards $112,000.

Macroeconomic level: The stability of the Strait of Hormuz and the trend of global oil prices will directly affect the decisions of the Federal Reserve. Nic Puckrin, the founder of Coin Bureau, warned: "If oil prices continue to rise due to any subsequent friction, inflationary pressures will force the Federal Reserve to maintain a hawkish stance, which will pose a headwind for all risk assets, including cryptocurrencies." The market's expectations for a Federal Reserve rate cut in September will be key in determining the liquidity environment for the second half of the year.

Geopolitics: Whether the current ceasefire agreement is stable and whether the situation in the Middle East will experience fluctuations remains the biggest X factor. Any new spark of conflict could push the market back into "Risk-Off" mode.

Written at the end

From a sharp decline to a surge, the conflict between Israel and Iran on the 12th provided a vivid macro trading lesson for the cryptocurrency market. Bitcoin played a complex dual role in this: it was both a risk asset sold off in panic and a resilient asset that rebounded first after the crisis eased.

This baptism once again proves that the value of Bitcoin lies not only in its code but also in how it is traded, interpreted, and given narrative in the global macro chess game. With the repair of risk sentiment, the short-term outlook for the market is optimistic, but the road ahead remains full of uncertainties. For investors, understanding and mastering Bitcoin's "dual personality" will be key to navigating through cycles.