The cryptocurrency market became highly volatile after military tensions between the United States and Iran increased in late February 2026. In the 24 hours following the first strikes, the total value of the crypto market dropped by about $125.6 billion, a fall of around 5.4%. This brought the market’s total capitalisation to about $2.2 trillion.
The sudden drop showed how sensitive digital assets can be to global political events and changes in investor confidence.
Iran’s role in the crypto market
Market analysts say the sell-off followed a pattern often seen during geopolitical crises. When political tensions rise, investors usually move their money away from risky assets like stocks and cryptocurrencies.
At the same time, the situation has drawn attention to Iran’s growing role in the global cryptocurrency ecosystem. In recent years, digital assets have become more common in the country, partly because international sanctions limit access to traditional financial systems. Many individuals and businesses use cryptocurrencies to move money across borders or protect their savings.
Blockchain research companies Chainalysis and Elliptic reported a sharp increase in funds leaving Iranian cryptocurrency exchanges after the strikes. According to Elliptic, crypto outflows from Iranian exchanges rose by about 700% after the attacks involving the United States and Israel.
The outflows reached about $2.89 million within a single hour and totaled roughly $10.3 million over three days. Researchers believe this trend may show how people use digital assets to move money or protect their wealth during uncertain times.
Estimates from TRM Labs suggest that cryptocurrency activity in Iran reached about $10 billion in 2025. Meanwhile, Chainalysis reported around $7.8 billion in transactions connected to Iranian-hosted wallets during the same year.
Bitcoin mining in Iran
Iran has also become an important location for Bitcoin mining. One key reason is the country’s heavily subsidised electricity, which makes mining cheaper than in some other mining hubs.
The estimated electricity cost to produce one Bitcoin in Iran is about $1,324. When additional expenses such as hardware maintenance, taxes, and regulatory fees are included, the total cost of producing one Bitcoin is estimated to range between $10,000 and $15,000.
Elliptic estimates that licensed facilities in Iran account for around 5% of global Bitcoin mining capacity. When unofficial mining operations are included, some estimates suggest the share could be as high as 15%.
However, measuring the exact size of the industry is difficult. Historical estimates from Elliptic partly rely on data from the Cambridge Centre for Alternative Finance. Government data from 2021 also showed that crypto miners were using up to 600 megawatts of electricity at the time.
Reports from Iranian research groups warn that the country may face a power shortage of more than 18,000 megawatts during peak summer demand in 2026. Analysts estimate that cryptocurrency mining currently consumes about 2,000 megawatts of electricity. This is almost twice the output of the Bushehr Nuclear Power Plant, although it still represents less than 3% of Iran’s total electricity consumption.
Because of these concerns, policymakers have increasingly focused on illegal mining operations. Some proposals include raising electricity tariffs for miners and giving authorities stronger powers to seize unregistered mining equipment.
Why crypto reacts to geopolitical events
Cryptocurrencies are now closely connected to global financial markets. As a result, major political or economic developments can quickly influence digital asset prices.
During periods of global tension, investors often move their money into assets seen as safer, such as Gold and government bonds. This shift can create selling pressure in riskier investments like technology stocks and cryptocurrencies.
However, this relationship is not always consistent. Damian Loh, chief investment officer at Ericsson Capital, told Forbes that the correlation between cryptocurrencies and other volatile assets, including the Nasdaq Composite, has weakened recently. He said Bitcoin’s reaction to the latest strikes was relatively moderate compared with past geopolitical shocks.
Dollar strength and crypto markets
By Friday, Bitcoin had fallen more than 3%, trading near $68,000. Since tensions increased in late February, two main factors have influenced crypto markets.
First, rising geopolitical risk has led some investors to reduce their exposure to volatile assets. Second, the United States Dollar has strengthened. Historically, cryptocurrencies often move in the opposite direction of the dollar.
Loh explained that because the initial strikes happened during a weekend—when traditional financial markets were closed—Bitcoin acted as a real-time indicator of global investor sentiment. He also noted that Bitcoin had already been weakening for several weeks before the conflict, which may have limited the scale of the sell-off.
When Bitcoin prices approached the $60,000 level, a key support level for many traders, buying activity increased. This helped the cryptocurrency recover part of its earlier losses.
Investor confidence also received some support from political discussions in Washington about the Clarity Act, a proposed regulatory framework aimed at providing clearer rules for digital assets.
Different views on the market outlook
Analysts remain divided about where cryptocurrency markets may go next. Loh believes that progress on the Clarity Act and new investment into crypto exchange-traded funds could support prices in the coming months. Under this scenario, Bitcoin could potentially rise toward $85,000.
Other analysts are more cautious. They see the current market as a period of consolidation due to geopolitical uncertainty. Some warn that if Bitcoin falls below the widely watched $60,000 support level, the next possible price target could be near $50,000, especially if global tensions increase and investors continue shifting toward traditional safe-haven assets.
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