This week, in the middle of Eastern Eight Time, the situation in the Middle East has once again escalated sharply: Iran launched ballistic missiles at multiple Gulf countries except Oman, and the Foreign Minister announced loudly that they would strike all U.S. military bases in the Middle East. Explosions were heard in Riyadh, the capital of Saudi Arabia, and a series of news hit the global market within hours. Almost concurrently, Bitcoin saw a surge of approximately 1.8 billion dollars in sell volume within just one hour (according to Darkfost data), with the sell pressure concentrated and sourced from a single entry, serving both as a thermometer for sentiment and exposing the limitations of the data metrics. In the stark contrast between missiles crossing the Gulf and the rapid flip in the market, an old question has resurfaced: under the high pressure of geopolitical conflict, can crypto assets still be regarded as a safe haven, or will they become the first high-risk chips to be discarded by institutions and traders?
Missiles Crossing the Gulf: How War Sparks Market Reaction
● The unfolding of the event chain has a strong sense of "script": Jin Ten and BlockBeats were among the first to relay the news stating that Iran launched ballistic missiles at all Gulf countries except Oman, illuminating the geopolitical landscape almost instantly; then, Planet Daily cited the Iranian Foreign Minister's statement, saying they would strike all U.S. military bases in the Middle East, upgrading the conflict from a "local strike" to "regional deterrence"; immediately thereafter, Foresight News reported explosions in Riyadh, creating a vivid picture of potential conflict impacting core energy and financial nodes, which quickly solidified in traders' minds.
● From the perspective of the timing of information flow, this round of impact is not an isolated flash report, but rather a multi-source, overlapping input chain: updates from Jin Ten and BlockBeats regarding military situations, amplification of official Iranian statements by Planet Daily, and the explosions captured by Foresight News, with a number of Chinese and crypto-specific media outlets pushing updates in succession within a few hours, leading market participants to gradually realize through a "fragmented puzzle” approach that this was a larger-scale event covering multiple countries and potentially involving U.S. military forces, rather than conventional news at the level of border friction.
● The layered amplification of information diffusion was particularly crucial in shaping panic sentiment: initially, war reports circulated mainly within military telegram accounts and geopolitical observation X accounts, only among military enthusiasts and a few macro traders; as financial media began to relay the information, the narrative was rewritten into a market narrative threatening "Gulf energy security and U.S. military deployment”; finally, when these headlines reached the trading terminal's pop-up notifications and social media’s hot search lists, each order on the market was, in fact, assigning a personal price to "missiles crossing the Gulf," thus completing the panic's diffusion from a small circle to the whole market.
1.8 Billion Dollars in One Hour: How Panic Materializes in the Market
● During the window when missile news was constantly trending, monitoring agency Darkfost provided a striking set of data: Bitcoin's sell volume surged to approximately 1.8 billion dollars within one hour. This number was quickly interpreted by the market as a quantitative metric of panic level, but it must be noted with risk—current statistics come from a single source and lack cross-validation from multiple data vendors, and did not differentiate between the detailed composition of spot and contract, its "symbolic significance" may outweigh strict statistical meaning.
● Darkfost analysts also provided the assessment that "sellers clearly dominate, and the market is increasingly risk-averse in the short term," which seems quite applicable from the market's visual perspective: the depth of Bitcoin spot orders on major exchanges showed a clear downward inclination, large orders actively sold through buy order levels continuously, while at the same time, in the contract market, long positions passively reduced, and short positions accelerated, causing the order book to shift quickly from slightly bullish to completely leaning towards selling pressure, forming a chain reaction of downward resonance between spot and derivatives.
● If one looks at this hour under the micro lens of high-frequency trading and order book liquidity, one can see the details of emotion shifting from hesitation to collective fleeing: initially, there were sporadic large market orders as a test sale, the buy orders still had strength to absorb; as missiles and U.S. military bases were frequently mentioned, small to medium funds began to pull their orders and seek "safety" at lower price levels, the order book thinned rapidly, and slippage increased sharply; when some key price levels were breached, "not asking for price, selling half first" risk control instructions took effect, turning panic from individual judgment to programmed, collective automatic execution.
● From the nature of the motivation for reducing positions, this round of approximately 1.8 billion dollars in selling pressure appears more like a short-term risk control response to sudden geopolitical risk, rather than the formal starting point of a systemic de-risking cycle: on one hand, the sell-off was concentrated in a very brief time window following the news explosion, and there is a lack of evidence supporting a one-way capital outflow lasting several days; on the other hand, at the macro level, there were no signals of liquidity tightening akin to those in 2022, closer to a mechanical adjustment of “over-weighted positions, first reduce risk exposure,” rather than a collective denial of crypto assets as an asset class.
Middle Eastern Funds Slamming the Brakes? Sovereign and Large Capital's Invisible Moves
● In terms of market sentiment, the narrative that "Middle Eastern sovereign funds may sell off crypto positions" quickly gained traction, linked with the speculation that "petrodollars are reallocating risk assets." The logic chain is quite simple: when missiles directly threaten Gulf energy facilities and U.S. military bases, regional sovereign funds need to reserve a larger buffer for their country's fiscal and monetary stability, with the most readily available being liquid and lucrative crypto asset combinations. However, both on-chain and off-exchange data currently lack the ability to identify specific accounts or fund names, and this hypothesis remains more on the level of macro motivation and capital behavior habits.
● The reason why "Middle Eastern funds" have been spotlighted repeatedly during this round of volatility is due to Gulf countries' multi-faceted layout in the crypto industry over the past few years: from the UAE's leading openness of exchange and custody licenses, to Saudi and Qatari funds appearing in the cap tables of several major projects and funds, to the exploration of compliance frameworks and tax policies within the region, making them both investors in the industrial ecosystem and key sources of global liquidity. When missiles fly across the same sky, the market naturally first questions: will these funds that have "deeply engaged" in crypto assets choose to slam the brakes or accumulate inversely.
● In probing "who is selling" from the data traces, what can currently be observed is often just a silhouette: some large on-chain transfers significantly increased during panic periods, yet it's hard to discern whether they were internal transfers within exchanges or true exits; the quoted prices in over-the-counter transactions showed a widening of discounts in a short time frame, indicating an increase in liquidity demand from institutions; the one-way migration from exchange cold wallets to hot wallets suggests potential selling pressure preparation. But these signs are still a clear distance from the conclusion that "Middle Eastern sovereign funds are collectively reducing positions," a more reasonable expression would be—that funds logically motivated to reduce positions may be participating in this round of selling, but all discussions at this stage are conditional inference rather than confirmed facts.
Safe Haven or Withdrawal: Funds Swinging Between Crypto and Dollar
● On a micro level, some funds opted to sell more volatile crypto assets, turning to increasing holdings in dollar-denominated assets and fiat-pegged on-chain tools, with their hedging logic clear: in an environment where missiles threaten energy and military infrastructure, the primary task is to lock in nominal value and reduce book volatility. Short-term traders are more inclined to view this as a "reducing window" for high-beta assets, while institutional risk control teams base their actions on VAR and stress test results, executing pre-set risk thresholds, where once market volatility and declines trigger warnings, they will automatically increase the reallocation ratio towards dollars and short-duration assets.
● Looking back at past experiences, in the face of significant shocks in traditional markets, the role of crypto assets often swings between "alternative safe-haven tools" and "first to be dumped risk assets": during periods of high inflation and questioning of monetary credit, Bitcoin and others are often packaged as long-term chips against fiat depreciation; but during sudden impact scenarios like missile strikes or financial institutional collapses, what institutions choose to sell off are often all high-volatile assets to switch back to cash positions. It is under such tension that crypto assets can exhibit starkly opposite price trajectories across different event cycles, and investors' perceptions of their "safe haven properties" are continually adjusted.
● In this crisis, the on-chain flow related to dollar-pegged assets and the variations in over-the-counter premiums again become important metrics to observe levels of panic and risk aversion: on one side, the trading pairs of fiat-pegged assets in exchanges and DeFi protocols saw an increase in transaction proportion, showing that funds are more willing to stay on the pricing side; on the other side, some reports of fiat entry and exit indicated widening premiums and fees, suggesting that the real world’s demand for a "safe haven" is rising. While specific numbers are still being processed, directionally they are sufficient to indicate that during this missile crisis, funds did not overwhelmingly flow into the crypto market, but instead weighed back and forth between crypto and dollars.
Echoes of War Memories: From the Attack on Aramco to Today's Iteration
● To find a historical mirror for this round of shock, the attack on Saudi Aramco's oil facilities in 2019 is an unavoidable reference: at that time, global risk assets experienced significant short-term volatility, crude oil prices rose sharply, and the market quickly intertwined the incident with supply disruptions, soaring oil prices, and global economic slowdown; meanwhile, the crypto market was relatively small, with limited institutional participation, and Bitcoin was often marginalized as an "off-exchange sentiment indicator," despite amplifying price fluctuations, it was difficult to directly shake up the main structure of global asset allocation.
● Compared to 2019, the impact of missiles crossing the Gulf this time has intensified volatility on several dimensions: the speed of news dissemination upgraded from that year's "news push + institutional terminals" to a simultaneous three-pronged approach of "military accounts + financial media + social platforms," compressing the delay of information reaching traders' viewpoints to the minute level; the overall market capitalization and holding leverage in the crypto market significantly expanded, with institutional and sovereign funds’ participation far exceeding that of previous years, making any regional conflict have the chance to be amplified through crypto assets as a highly liquid medium into a catalyst for global risk repricing.
● If viewed through the triangular relationship of “geopolitical conflict × energy pricing × dollar liquidity,” the crypto market's position in the global risk map has also shifted: missile attacks directly impact oil price expectations and regional security premiums, which in turn affect the dollar's movement through inflation expectations and risk aversion demand; in this chain, Bitcoin, among others, partly undertakes long-term configuration demands to "hedge fiat and inflation," while also due to its high volatility and 24/7 trading attributes, it has become the first to be used to release panic and cash-out pressure. It is no longer just a marginal observer; rather, it has been incorporated into the "standard operations" toolkit for global assets responding to geopolitical conflicts.
The Fire of War Still Burns: The Next Trigger for the Crypto Market
● Looking back at this round of events, one can clearly outline a chain of impact: centered on Iran launching missiles at multiple Gulf countries and threatening to strike all U.S. military bases in the Middle East, war news rapidly spread through channels like Jin Ten, BlockBeats, Planet Daily, and Foresight News. Meanwhile, Darkfost monitored a surge of approximately 1.8 billion dollars in Bitcoin sell volume within one hour, and the assessment that "sellers clearly dominate" was instantaneously validated in the market, thus quantitatively and visually mapping out the panic sentiment. The combination of these three elements completed the transmission from the battlefield to the order book in just one hour, translating a conflict originally limited to geopolitical levels into an immediate stress test of the pricing system in the crypto market.
● However, it must be acknowledged that key variables are still evolving: the specific impact on the U.S. military bases in Bahrain is currently only described by some military observation accounts, awaiting validation from official channels; the actual effect of Israeli air defense systems intercepting missiles remains scattered in reports from military institutions and a few media outlets. Before these key pieces of information become clear, the market's pricing of the future situation inevitably carries strong anticipatory elements, and any new developments, diplomatic statements, or liquidity policies could become the next spark to ignite the crypto market.
● Looking ahead to the paths to come, three drastically different directions can be envisioned: firstly, if all parties rapidly cool down at the military and diplomatic levels and the missile crisis is controlled within a limited scope, the current panic sell-off may be interpreted post-factum as an "overreaction," and sentiment recovery along with a technical rebound will be the main theme; secondly, if the conflict evolves into a longer-term, protracted regional confrontation, structural repricing of energy prices and dollar liquidity will be inevitable, and crypto assets will be forced to seek a new balance between "risk asset discounts" and "long-term hedging tool premiums"; thirdly, as each geopolitical crisis influences the crypto market, regulatory bodies may formally include "geopolitical risk" in their framework for examining the crypto market, leading the industry into a more complex and sensitive new stage under the dual constraints of compliance and intensified geopolitical ties.
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