In the constantly shifting landscape of global finance, Bitcoin has repeatedly demonstrated a distinct sensitivity to geopolitical events, often revealing unique investment opportunities amid periods of conflict and uncertainty. By examining recent history, we uncover an intriguing pattern linking Bitcoin's price movements to major geopolitical conflicts and, notably, the behavior of oil prices during these times. Understanding this connection can unlock hidden potential for investors looking to navigate Bitcoin’s next phase.
Geopolitical Conflicts and Bitcoin’s Volatility
Over the past decade, several major conflicts have had a profound impact on Bitcoin’s market trajectory. For instance:
- In October 2023, following the outbreak of the Israel-Hamas war, Bitcoin initially bottomed but then surged by approximately 300% over the subsequent year.
- In September 2020, a conflict in the Eurasia region led to Bitcoin climbing 500% within a year after bottoming.
- Going further back, the Battle of Mawi in the Philippines during May 2017 preceded Bitcoin’s remarkable rally of 550% within the next year.
- Similarly, an April 2015 conflict in West Africa saw Bitcoin gain 250% over the following twelve months.
These examples suggest a strong pattern: Bitcoin tends to bottom during geopolitical crises and then experience significant rallies. Intriguingly, however, there is an important exception worth examining. The February 2022 Russian invasion of Ukraine corresponded with Bitcoin plunging nearly 70% in the six months following—a stark contrast to the rallies observed in the aforementioned conflicts.
The Crucial Role of Oil Prices
So, what differentiates bullish outcomes from bearish ones amidst geopolitical turmoil? The answer lies predominantly in one key economic variable: the price of oil.
Oil is fundamental to the global economy, influencing two critical pillars — economic growth and inflation. The last two major Bitcoin bull market tops, including the peak around the Russia-Ukraine war, were indirectly driven by sustained rises in oil prices.
Oil and Economic Growth
Sharp increases in oil prices act like an invisible tax on economies. Higher energy costs force households and businesses to reduce spending in other areas, exerting a drag on overall economic growth. Historically, spikes of over 30% in oil prices within a short period have almost always triggered recessions—a scenario generally unfavorable for risk assets like Bitcoin.
Oil and Inflation
Rising oil prices fuel inflation as energy costs permeate through numerous sectors. When inflation accelerates, central banks often respond by pushing interest rates higher to cool inflation. This translates into higher government bond yields, lifting borrowing costs across the economy. Elevated rates encourage saving and discourage spending, creating a challenging environment for risk-oriented investments like cryptocurrencies.
This relationship was evident leading up to 2022, when oil prices rallied by 150%, and government bond yields jumped from roughly 1.5% to nearly 5%. Consequently, Bitcoin faced intense downward pressure, resulting in the severe 70% drop.
Assessing Today’s Oil and Bitcoin Landscape
Currently, oil prices have experienced a notable rally of over 30% since May 2025, with a significant intraday jump following Israel’s military action against Iran. However, oil has recently retreated by about 15%, indicating a relatively contained shock so far.
A critical factor to monitor is the possibility of the Strait of Hormuz—a narrow but vital shipping lane through which approximately 20 million barrels of oil transit daily—being blocked. If closed, oil prices could skyrocket, potentially reaching $200 per barrel, a 180% increase from current levels. Such a drastic surge could trigger a severe economic downturn, likely creating a bearish headwind for Bitcoin.
Fortunately, current assessments place the chance of the Strait closing before July at a low 2%, suggesting no immediate major oil supply disruption.
What This Means for Bitcoin Investors
At present, oil’s recent pullback and the low likelihood of a major shipping choke point closure mean there is insufficient evidence to adopt a fully bearish stance on Bitcoin. However, investors should stay vigilant. Should oil prices break above key resistance levels — specifically around $77 per barrel — and hold a sustained uptrend, this could signal heightened risk and prompt increased caution toward cryptocurrencies.
On the other hand, if the Middle East conflict deescalates and the recent ceasefire breach proves isolated, Bitcoin’s outlook could be quite bullish. After a 50% rally over just 45 days and only a modest 10% pullback from recent highs, Bitcoin is now trading within 5% of all-time highs. Such minor corrections are typical following sharp rallies and do not necessarily signal trend reversal.
Conclusion: Navigating Risk to Capture Opportunity
The interplay of geopolitical conflict, oil prices, and Bitcoin creates a dynamic environment filled with both risk and opportunity. By unlocking the understanding of oil’s pivotal role in shaping economic growth and inflation—both vital drivers of Bitcoin’s price—investors can better anticipate potential market moves.
As tensions simmer in the Middle East, the next movements in oil prices will serve as a crucial barometer for Bitcoin’s trajectory. Whether this latest conflict results in a sustained oil shock or conditions stabilize, those attuned to these macroeconomic signals can position themselves to seize Bitcoin’s hidden potential in the months ahead.
Staying informed and adaptive, grounded in data and market realities, remains the key to navigating this unique investment landscape successfully.
By Wolfy Wealth - Empowering crypto investors since 2016
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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile.
