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U.S. and Israel Strike Iran, Crypto Market Loses $100M in Minutes

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U.S. and Israel Strike Iran, Crypto Market Loses $100M in Minutes

TLDR:

  • BTC dropped below $64,000 within hours of Israel’s confirmed strike on Iran’s presidential HQ.
  • Ethereum fell over 5% to under $1,900 as traders liquidated risk positions across altcoins.
  • Over $100M in long positions were wiped out within 15 minutes of the strike news hitting markets.
  • Polymarket trader Vivaldi007 turned $385K profit betting on a U.S.-Israel Iran strike since Feb 8.

Explosions rocked Tehran after Israel launched strikes on Iran’s presidential headquarters and Ministry of Intelligence. Sirens blared across Israel as the IDF sent emergency alerts to citizens’ phones. 

Crypto markets responded immediately, shedding over $100 million in long positions within 15 minutes. The joint operation, reportedly involving the United States, sent shockwaves far beyond the Middle East.

Israel-Iran Strike Sends Crypto Prices Into Freefall

Bitcoin dropped roughly 3% within hours of the news breaking. It fell below $64,000 as traders rushed to cut exposure. 

Ethereum took a harder hit, sliding over 5% to under $1,900. The broader crypto market cap lost around 6% in early trading, according to market data. According to a snapshot from the cryptobubbles, the market appears red. Most assets are recording substantial drops.

crypto market snapshot on Crypto Bubble

The IDF confirmed sirens sounded throughout Israel shortly before the strikes became public. Citizens received direct cellular alerts to stay near protected spaces. The military framed the alert as a proactive measure. It signaled the scale of what was unfolding.

On-chain tracking platform Lookonchain reported one high-profile casualty of the volatility. Trader Machi, who had deposited $245,000 just four days prior, was liquidated again. His account dropped to only $13,580. The timing proved catastrophic for leveraged long positions across the board.

Not everyone lost. Lookonchain also flagged Polymarket trader Vivaldi007, who had been betting on a U.S.-Israel strike against Iran since February 8. He placed wagers on nearly every available date and kept losing until now. The strikes pushed his total profit to $385,000.

Geopolitical Risk Reignites Crypto Market Volatility

This pattern is not new. When the U.S. struck Iranian nuclear sites in June 2025, BTC plunged below $100,000 during a 7% market-wide selloff. 

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Oil supply fears and global economic uncertainty drove the move. Crypto behaved like a risk asset, not a safe haven.

The April 2024 Israel-Iran exchange produced a similar response. BTC briefly dipped under $60,000 as capital rotated toward gold and the dollar. Markets recovered once tensions cooled. Whether that playbook repeats depends on what comes next.

Iran’s potential response remains the key variable. A closure of the Strait of Hormuz, which handles roughly 20% of global oil, could spike energy prices and reignite inflation fears. 

Central bank tightening in that scenario would add further pressure on risk assets. Past modeling suggests a full escalation could cut crypto valuations by 10 to 20% in the short term.

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The IDF has not issued further operational updates. Markets remain on edge.

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Crypto World

Stablecoins Do Not Threaten Banking Just Yet: Analyst

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Stablecoins Do Not Threaten Banking Just Yet: Analyst

The impact of stablecoins on the banking sector appears “limited” at the current phase of the adoption cycle, but banks could face increasing competition and an erosion of market share as the stablecoin sector and tokenized real-world assets (RWAs) grow in market capitalization. 

“So far, the use of stablecoins remains limited, but their market capitalization exceeded $300 billion at the end of last year,” Abhi Srivastava, associate vice president of Moody’s Investors Service Digital Economy Group, told Cointelegraph.

The stablecoin market cap has surged past $300 billion. Source: RWA.xyz

The role of stablecoins in payments, cross-border commerce and onchain finance is “expanding,” despite their currently limited role, Srivastava said, adding that existing payment systems in the US are already “fast, low-cost and trusted.” He said:

“For the banking sector, at this stage, disruption risk appears limited. In the near term, US rules that prohibit stablecoins from paying yield mean they are unlikely to replace traditional deposits at scale domestically.”

However, over time, growing adoption of stablecoins and tokenized RWAs, traditional or physical financial assets represented on a blockchain by a token, could place “pressure” on the banking sector, leading to deposit outflows and reduced lending capacity, he said.

Stablecoin regulatory policy has become a hot-button issue among crypto industry executives and those in the banking sector, with fears that yield-bearing stablecoins could erode banking market share proving to be a stumbling block for the CLARITY crypto market structure bill in Congress. 

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Related: Stablecoins behave like FX markets as liquidity splits: Eco CEO

CLARITY Act stalled, as banks fight yield-bearing stablecoins

The Digital Asset Market Clarity Act of 2025, also known as the CLARITY Act, is a comprehensive crypto market regulatory framework that establishes an asset taxonomy, regulatory jurisdiction and oversight over the crypto markets.

The CLARITY crypto market structure bill. Source: US Congress

It is now stalled in Congress after a group of crypto industry companies, led by cryptocurrency exchange Coinbase, publicly stated opposition to earlier drafts of the bill.

A lack of legal protections for open-source software developers and a prohibition on yield-bearing stablecoins were among some of the most contentious issues cited by crypto industry opponents of the legislation.

Several attempts have been made by US lawmakers and the White House to negotiate a bill acceptable to both the crypto industry and the bank lobby.

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Earlier this month, North Carolina Senator Thom Tillis said he plans to release an updated draft bill proposal that would be acceptable to both sides; however, the bill has reportedly received pushback, according to Politico, and has yet to be publicly released. 

However, other crypto industry executives and market analysts have warned that if the CLARITY Act fails to pass, it could open the crypto industry up to future regulatory crackdowns by hostile lawmakers and officials.

Magazine: Stablecoins will see explosive growth in 2025 as world embraces asset class