Bitcoin has reacted as expected to recent hostilities between the United States and Iran, reflecting a pattern that has consistently emerged during past geopolitical escalations. Analysts have begun to analyze the current price structure against similar scenarios in 2022 and 2023, where initial sell-offs were often followed by significant recoveries.
War Headlines And The 20%-40% Rally Pattern
The latest wave of geopolitical tensions arrives at a precarious time for the cryptocurrency market, with Bitcoin currently down 48% from its all-time high. The leading cryptocurrency is on track to complete its fifth consecutive month in the red, marking one of the weakest starts in its history. February alone saw a 14.8% decline, making it the third-worst February for Bitcoin, beaten only by 2014 and 2025.
Crypto analyst Ted Pillows shared a weekly chart illustrating Bitcoin’s behavior during prior diplomatic escalations. For instance, in February 2022, when the conflict in Ukraine erupted, Bitcoin initially fell but later surged by around 40%. Similarly, in June 2025, after military strikes on Iran, it recorded a recovery of approximately 25%.
Following this weekend’s US strikes on Iran, Bitcoin has once again faced downward pressure. The essential question raised by Pillows is whether the typical post-shock recovery will materialize yet again.
Another analyst, Sherlock, focused on shorter-term reactions, indicating that in past instances of US or Israeli military action against Iran, Bitcoin has tended to drop sharply over the weekend, only to recover within 24 to 48 hours. For example, after Iran attacked Israel in April 2024, Bitcoin saw an overnight decrease of 8%, which was regained within two days.
In June 2025, following US strikes, Bitcoin experienced a 6% dip that recovered by Sunday, leading to a remarkable 62% rise over the following two months, reaching new all-time highs by October. Notably, each decline occurred prior to the reopening of traditional financial markets.
Market Already Deeply Corrected
This current market setup, however, presents a different picture compared to those earlier episodes. Bitcoin was enjoying a strong upward trend during the geopolitical turmoil of 2025, whereas the present market reflects a prolonged drawdown, having faced five consecutive months of decline.
Currently, Bitcoin’s weekly RSI is at its lowest historical level, while the Fear & Greed Index has plunged into extreme fear for 22 days. Additionally, there has been a significant reduction in leveraged positions, with open interest at depressed levels.
In past instances, panic selling typically occurred after the geopolitical event. However, much of the forced selling seems to have happened prior to the latest strikes this time. Thus, weak hands have largely exited the market, and the excess leverage has already been cleared. Consequently, Bitcoin might not endure prolonged downward pressure from ongoing tensions and could stabilize sooner than in historical instances.
Featured image from Unsplash, chart from TradingView
