The Impact of the Israeli-Palestinian Conflict on the Crypto Market

2023-10-10, 06:35

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![](https://gimg2.gateimg.com/image/article/1690791857hotspot.jpeg)
## [TL；DR]: 
War first affects the real economy and stock market, especially in sectors such as energy, military, aviation, and transportation.

In retrospect of the past Russia-Ukraine conflict and the current Israeli-Palestinian conflict, <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> does not show significant risk aversion.

Some conceptual currencies related to digital payments in belligerent countries may benefit from an increase.

## Introduction
Since October 7, a large-scale armed conflict has erupted between the Palestinian organization Hamas and Israel. As the war situation continues to escalate, financial markets have also responded accordingly. This article will take the Israeli-Palestinian conflict as an example to explore the impact of war on the crypto market.
 
## The Market Impact of the Israeli-Palestinian Conflict
Since October 7, Israel has entered a state of war with the Palestinian radical organization Hamas, causing thousands of casualties and spreading the flames of war to neighboring countries. Lebanon and others have also declared war to join the fray. US President Biden, who has always supported Israel, subsequently announced that he will continue to support Israel.

This conflict is still ongoing, and although discussing the impact of war on our investors may not be timely, we highly value and hope for peace. However, it is also necessary to use this event to sort out the market impact, so that we can have a more acute and comprehensive view of the world and market, and cherish the overall value enhancement of society brought about by a peaceful environment.

Generally speaking, once a war breaks out, the real economy is first affected, which is the basic understanding of war. The stagnation of enterprise production and economy has caused a great impact on people's production and life.

The impact of war on financial markets usually first impacts the stock market and triggers people's attention to safe haven funds. Taking the current Israeli-Palestinian conflict as an example, the energy and military sectors led the way in gains, while aviation stocks suffered. Due to multiple airlines announcing the suspension of Israeli routes, airline stocks generally fell, with United Airlines, Delta Airlines, and American Airlines dropping more than 4% yesterday. In comparison, Israeli drone safety solution supplier ParaZero surged 132%.

Meanwhile, the Israeli-Palestinian conflict triggered a risk aversion sentiment, with gold prices rising 1.04%. In addition, although neither Palestine nor Israel produces oil, the conflict zone is the transportation area for Middle Eastern crude oil, which will also affect the crude oil supply. As of the end of the trading day, American Oil rose 4.34% and Brent crude oil rose 4.22%.

It is worth mentioning the Israeli stock market. After the outbreak of the conflict, the Israeli ETF fell by over 7%, marking its largest decline since March 2020. After a sharp drop of over 6% on Sunday, the Israeli stock market continued to open lower on Monday, with a drop of over 1% during the session. Still, as the Bank of Israel announced in the session that it would invest in liquidity to ease the volatility of the shekel (Israeli fiat) exchange rate, the Israeli stock market subsequently stopped falling and turned higher, closing up nearly 1%.

Bitcoin has many advantages such as being cross-border, convenient, and efficient, and is not subject to human manipulation. It has always been regarded as digital gold and has a hedging effect. For example, Mike Mc Glone, a senior macro strategist at Bloomberg, mentioned in a tweet that after the conflict between Israel and Hamas, Bitcoin has shown a trend of hedging.

However, the impact of the war on cryptocurrencies does not seem to be transmitted linearly from historical data, and there are still many details that need to be further explored.
 
## The Performance of the Crypto Market in the War
In fact, in retrospect of the past Russia-Ukraine conflict and the current Israeli-Palestinian conflict, Bitcoin does not show significant risk aversion.

As shown in the figure below, the Russia-Ukraine conflict broke out on February 24, 2022, with increases of 2.89%, 2.34%, -0.28%, and -3.59% on the same day and in subsequent days respectively; The large-scale armed conflict between Palestine and Israel broke out on October 7, 2023, with gains of 0.09%, -0.13%, and -1.18% on that day and subsequent days, respectively.

![](https://gimg2.gateimg.com/image/article/169691962210651696919570_.pic.jpg)
BTC Weekly Chart 1 Source: Gate.io
 
From the daily increase in coin prices, it can be concluded that the fluctuations in Bitcoin are normal and have not caused significant fluctuations in these local wars.

However, exploring war is not without guiding significance for crypto investment, as the two closest conflicts to the market are both localized and relatively controllable in scale. Once a large-scale war breaks out beyond the regional scope, it will greatly test the response of the crypto market. Therefore, we still need to pay attention to the subsequent changes in the war.

For example, COVID-19, which broke out in December 2019, did not have an impact on the financial market at first, but with the gradual spread of the epidemic, the global financial market, including Bitcoin, finally fell significantly in March, which can be said to be the result of the accumulation of panic among investors.

In addition, war will have the most direct impact on the crypto project of the belligerent concept.

For example, the Russia-Ukraine conflict led to a 600% surge in WAVES. <a href="/price/waves-waves" target="_blank" class="blog_inner_link">Waves</a> was the largest public chain project in Russia at that time. Its main value was to simplify cross-border transactions, which just matched people's demand for cross-border asset transfer under the impact of the war.

Under the shadow of the Israeli-Palestinian conflict, the BNT token of the DEX protocol Bancor surged by 50% yesterday, while the COTI, another major payment platform, also saw a nearly 20% increase on the same day. Bancor was the first decentralized exchange to use Automated Market Maker (AMM) liquidity pools, founded by a group of Israelis in 2016, with its operating center in Tel Aviv.

![](https://gimg2.gateimg.com/image/article/169691966210661696919590_.pic.jpg)
BNT Daily Chart 2   Source: gate.io
 
It is worth noting that the significant increase in tokens WAVES, BNT, and COTI mentioned above are all related to digital payments. Israel, as a technological powerhouse, has a strong position in the crypto field. However, other concept currencies that deviate significantly from payment or trading business, such as SSV, SCRT, BNT, CHR, POOLZ, KAS, etc., have not experienced significant increases, but have instead suffered a decline.
 
## What is the Future Price of Bitcoin
Since the outbreak of the Israeli-Palestinian conflict, Bitcoin has not seen a significant increase to highlight its safe haven nature, and still maintains a volatile adjustment trend in the $25,000- $28,000 range, with a stronger trend than Altcoin. Of course, this strength is not due to the hedging demand brought about by the war, but rather the relatively strong state that has been maintained since the beginning of this year.
![](https://gimg2.gateimg.com/image/article/169691968910671696919603_.pic.jpg)
BTC Daily Chart 3 Source: gate.io
 
Presently, the market's focus on BTC is still on three things: the halving event of next year, the SEC's review of spot ETFs, and the Federal Reserve's expected interest rate cut next year.

The impact of war on the financial market is complex and ever-changing. As Bitcoin continues to enter the mainstream consensus, this impact will continue to overlap with the crypto market. Therefore, although the impact on crypto assets in the short term is limited, it is still necessary for investors who have diversified portfolio assets to pay attention to the process of war and its impact.

We still need to closely observe whether the sudden outbreak of the Israeli-Palestinian conflict in October will have a further impact on the global situation and the Federal Reserve's interest rate policy, and whether the scale of the war, if it continues to expand, may have a significant impact on the crypto market that is different from usual.

<div class="blog-details-info">
<div>Author:**Peter L.**, Gate.io Researcher
<div>Translator:Joy Z.
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

<div class="blog-details-info">
  <div>作者：**Peter L.**，Gate.io研究员
  <div class="info-tips">\*本文仅代表作者观点，不构成任何交易建议。
  <div>\*本文内容为原创，版权为Gate.io所有，如需转载请注明作者和出处，否则将追究法律责任。
</div>

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