Crypto Controversy Ignited by Israeli-Palestinian Conflict: What Impact Does It Have on Regular Investors?

On October 7th, the Israeli-Palestinian conflict erupted as the armed group Hamas clashed with the Israeli Defense Forces, marking the beginning of a military confrontation.

On October 8th, the Lebanese armed group Hezbollah launched rockets at "Shebaa Farms," an area controlled by Israel, claiming to support Hamas and the Palestinian people.

On October 9th, Israeli Defense Minister Yoav Gallant ordered a full-scale siege of the Gaza Strip, cutting off fuel, food, and other supplies.

On October 15th, UN Secretary-General Antonio Guterres called for the release of hostages by Hamas and urged Israel to allow humanitarian aid and personnel into the Gaza Strip. As of October 15th, the conflict had resulted in over 4,000 deaths.

Following the outbreak of the war, both sides of the Israeli-Palestinian conflict have attempted to raise funds through cryptocurrencies for military expenses and relief efforts. The Israeli crypto community established Crypto Aid Israel, while the Palestinian side has also utilized cryptocurrencies to raise funds.

Funding plays a crucial role in wars, meeting the demands for weapons and supplies. Consequently, Israel has taken measures to choke the economic resources of Hamas, such as freezing and confiscating 190 Binance accounts related to Hamas and Tether freezing 32 cryptocurrency addresses related to Israel (worth a total of $800 million).

This illustrates that cryptocurrencies have become important tools for raising funds in wars, offering a more secure, convenient, and efficient payment method compared to gold or the US dollar.

Of course, due to the anonymity and tamper-proof nature of cryptocurrencies, they have also become a preferred choice for various illicit activities, attracting attention, regulation, and crackdowns from regulatory authorities.

Moreover, Mike McGlone, Senior Macro Strategist at Bloomberg, stated that Bitcoin showed a tendency towards safe-haven assets after the escalation of the Israeli-Palestinian conflict. This means that the war would stimulate demand for BTC among investors, driving its price upwards, which is considered a positive outcome.

However, over time, even if the war continues, the diminishing safe-haven demand will weaken the external influence on Bitcoin's price. Therefore, the impact of the Israeli-Palestinian conflict on BTC price should not be overestimated, and one should not believe in statements claiming that "war will inevitably cause a surge in BTC."

In reality, unless the situation significantly worsens, the purchasing power generated by safe-haven demand is not sufficient to push the BTC price above the upper range of $31,000.

Bitcoin Daily Price Chart, Source: TradingView.

Furthermore, in the environment that crypto wallet address may get frozen due to  Israeli-Palestinian conflict, it is important not to accept USDT or other cryptocurrencies from unknown sources and avoid transferring funds to unfamiliar cryptocurrency addresses to prevent being affected.