Bitcoin fell to about $62,258 by mid-morning in New York on Thursday, sliding below the level at which it had traded before the war with Iran began and wiping out the gains it had accumulated during the conflict. The drop capped a steady week-long decline that has tracked the deepening risk aversion across financial markets.
When the war started, bitcoin had been changing hands near $65,879, and it climbed above $82,000 by 11 May as investors initially treated it as a hedge. That advance has since fully unwound, leaving the cryptocurrency lower than where it began, an illustration of how quickly the speculative premium can drain away when broader sentiment sours.
Ethereum, the second-largest cryptocurrency, fell in tandem, declining to roughly $1,741 as the selling spread across the digital-asset market. The moves mirrored the pressure on equities, where rising oil prices and Treasury yields had pushed stocks off their records, undercutting the appetite for riskier holdings.
The retreat challenged the notion, advanced by some advocates, that bitcoin behaves as 'digital gold' insulated from geopolitical turmoil. In practice, the asset has more often traded as a high-beta risk play, rallying when investors are confident and falling hard when they retreat to safety, as gold and the dollar have drawn haven flows instead.
The war in the Gulf has dominated market psychology for weeks, with each new strike around the Strait of Hormuz lifting oil and rekindling fears about inflation and growth. For crypto, which lacks the cash flows or yields of traditional assets, that uncertainty has translated into persistent downward pressure.
Whether digital assets stabilise will likely hinge on the trajectory of the conflict and the broader tone of risk markets. For now, the erasure of bitcoin's war-era gains stands as a stark marker of how thoroughly the Gulf crisis has reshaped sentiment across asset classes.