Bitcoin fell roughly 7% in the hours after U.S. and Israeli forces struck Iran on February 28, triggering over $1.8 billion in derivatives liquidations. Within days, the crypto market's fear gauge had fallen to its lowest reading since the 2022 Terra collapse. Regional analysts in Southeast Asia and South Asia are now modeling the conflict as a sustained macro risk, not a short-term shock.

Coordinated U.S.-Israeli airstrikes on Iran on February 28, 2026, killed Iran's Supreme Leader and triggered retaliatory missile launches on Israel and attacks on American military installations in Kuwait, the UAE, and Bahrain.

Bitcoin dropped from approximately $68,000 to $63,000 in the hours that followed. By Monday, March 2, it had recovered to roughly $66,500 to $68,500, outperforming S&P 500 futures, which fell 1.1%, and Nasdaq 100 futures, which fell 1.5%. The partial recovery has not calmed analysts in Bangkok and Islamabad, who are warning that a prolonged conflict could restructure energy costs, inflation, and digital asset sentiment across the region for months.

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Brent crude surged approximately 13% to $82 per barrel following the strikes, its highest level since July 2024. The Strait of Hormuz, through which approximately 20 to 21% of global petroleum liquids pass according to widely cited industry estimates, is now a central focus of risk analysis. If Iran retaliates by blocking the strait, analysts at AlphaMind Research estimate prices could climb above $100 per barrel and push U.S. CPI inflation to approximately 5%.

Bangkok-based brokerage Bualuang Securities, the brokerage arm of Bangkok Bank, deployed a three-scenario framework for Thailand's SET Index. In a baseline case with no structural energy disruption, it projects a target of approximately 1,560. Under a stress scenario involving moderate supply disruption, the framework anticipates more constrained performance with elevated market volatility. In a tail-risk scenario involving prolonged regional spread, it sees the index falling 15 to 20%, down to roughly 1,200.

Woramet Chansen, an investment advisor at Merkle Capital in Bangkok, said in a note cited by the Bangkok Post that "prolonged conflict could dampen sentiment for digital assets due to several economic pressures, particularly through energy supply disruptions raising oil prices and prolonging inflation." Chansen projected Bitcoin could fall below $50,000 if tensions persist through the third quarter of 2026.

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The derivatives data from February 28 illustrates how quickly crypto markets can amplify a geopolitical signal. Because crypto trades continuously, including on weekends when stock exchanges are closed, Bitcoin and oil perpetual contracts on platforms such as Hyperliquid served as the primary real-time pricing mechanism for global risk appetite that Saturday. Approximately $300 million in Bitcoin long positions (bets that prices would rise) were liquidated as the news broke. Trading firm QCP Capital noted that this figure, while significant, was "comparatively modest" relative to earlier deleveraging episodes, suggesting that many leveraged positions had already been reduced in the weeks prior. Total crypto derivatives liquidations across the market exceeded $1.8 billion in a single hour.

Crypto futures open interest across the market dropped 2% to $93.78 billion. By March 5, the Crypto Fear and Greed Index, a composite sentiment measure, had fallen to 10 out of 100, its lowest reading since the Terra/LUNA collapse in May 2022.

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Despite the fear signal, institutional positioning told a different story. Spot Bitcoin exchange-traded funds recorded net inflows of $458.2 million on March 2 alone, a striking reversal given that February as a whole saw net outflows of $3.8 billion from the same products and that this inflow arrived during the fifth consecutive month of net losses from spot Bitcoin ETFs. On-chain data tracked by SpotedCrypto shows that large wallet holders, often called whales, accumulated roughly 270,000 BTC over the prior 30 days. Bitcoin's 14-day RSI (Relative Strength Index, a momentum indicator where readings below 30 suggest an asset is oversold) sat at 25.6 as of early March. Options market data from QCP Capital showed traders purchasing large blocks of call options (bets on price increases) at $74,000 and $75,000 strike prices expiring March 27. Those purchases were made even as the conflict was escalating on a Saturday, when equity markets were closed, indicating that some institutional buyers are positioning for a rebound.

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A structural shift in Bitcoin's correlation with other assets complicates its role in regional portfolios. In 2026, Bitcoin's 60-day correlation with the Nasdaq has reached approximately 0.75, meaning the two assets are moving closely together. Its correlation with gold has turned negative, sitting at roughly negative 0.27. Gold itself reached record highs above $5,500 per ounce during the crisis period. This makes Bitcoin less useful as a hedge against broad equity risk in the near term and more comparable to a high-beta tech stock. Analysts at AnalyticsInsight have characterized this dynamic as Bitcoin becoming "commodified risk," a label that reflects the asset's deepening behavioral alignment with leveraged technology equities rather than with safe-haven instruments.

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For users across South Asia and Africa, the stakes run beyond portfolio performance. In India, nearly half of all crude oil imports travel through the Strait of Hormuz, and Gulf-based remittances totaling $51.4 billion annually (representing approximately 38% of India's total remittances) are now considered at risk.

In Pakistan, Times of Islamabad reports that analysts project potential monthly economic losses of up to $3 billion if the conflict spreads. Those estimates reflect Pakistan's $10.7 billion annual fuel import bill, a $22 billion trade gap with exposed supply chains, and remittance shortfalls estimated at between $500 million and $1.5 billion per month.

Pakistan's Virtual Assets Regulatory Authority launched a regulatory sandbox on February 20, explicitly including crypto-based remittance systems. Analysts suggest this signals that policymakers are treating digital payment rails as a contingency for disrupted dollar corridors.

In Nigeria, where over 77 million people hold crypto assets according to available estimates, stablecoins (tokens pegged to the U.S. dollar) function as inflation protection rather than speculation. Across Sub-Saharan Africa more broadly, stablecoins now account for the majority of crypto transaction volume, according to the Chainalysis Africa Report. Kenya, which ranks 21st globally on the Chainalysis Crypto Adoption Index, enacted its Virtual Asset Service Providers Act in October 2025, establishing a regulatory framework that will shape how increased capital flows from this crisis are processed across East Africa.

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Whether Bitcoin repeats its pattern from June 2025, when it briefly broke below $100,000 before rallying to $123,000 within weeks, depends heavily on how the conflict develops over the next 60 days. QCP Capital pointed to that precedent explicitly. MEXC Research estimates a 70% probability of a sustained bearish scenario if tensions escalate further, with a possible retest of $60,000.

The longer-term picture is complicated by structural realignment in global finance. The BRICS mBridge platform, a centralized CBDC interoperability bridge operating under BIS Innovation Hub auspices, has now processed $55 billion in cumulative transaction volume and continues to attract interest from nations seeking alternatives to dollar-denominated finance. That trajectory represents a separate, slower-moving argument for alternative settlement infrastructure, one that sits alongside the short-term volatility rather than resolving it.