Impact of Israel-Hamas Conflict on Cryptocurrencies

Hamas terrorists entered Israel on 7th October 2023 and indiscriminately attacked Israel. The following day, the Israeli government declared war on Hamas. Thus, began the Israel-Hamas conflict. Consequently, it was found that it has gained mainly through cryptocurrency financing. Between August 2021 and June 2023, the Israeli authorities discovered that the wallets linked to Palestine Islamic Jihad received around $93 million in crypto. 

Possible Impact of Israel-Hamas Conflict

The Israel-Hamas conflict is raging on with many casualties on both sides. As a geopolitical event, it is affecting the cryptocurrency market. Many investors have a habit of relying on cryptos because they perceive it as a haven. Some have this misconception that cryptocurrencies are like gold and silver and can resist inflation. 

Real Impact of War on the Cryptocurrency Market

In the Israel-Hamas conflict, there is very little impact of the war on the market. The Israeli government encourages crypto mining. A disruption in the mining process can lead to a high price rise in the Bitcoin market. However, according to some financial analysts, the conflict may well have an international impact. This is because it can lead to global uncertainty. 

Israeli Police’s Actions During The War

Binance is one of the world’s largest crypto exchanges. During the war, the Israeli police investigated and found that some cryptocurrency Binance accounts were linked with Hamas. The Israeli police then froze the Binance trading accounts. The Commodity Futures Trading Commission (CFTC) filed a lawsuit against the company and its founder for this act. 

War’s Impact on Bitcoin

Bitcoin is one of the most dominant cryptocurrencies in the world. The cryptocurrency Bitcoin has been trading 0.26% lower since the war began. This trend is challenging the commonly-held industry view of cryptos as a non-sovereign store of value. The retreat of Bitcoin is surprising because the value of Bitcoin rose after Russia invaded Ukraine in 2022. Undoubtedly, the war is causing heightened tensions around the world. This invariably increases the risk factors and makes the markets more volatile.

Furthermore, the reputation of Bitcoin does not matter in the conflict because of the use of cryptocurrency by Palestinian Islamic Jihad and Hamas. Similarly, the Lebanese ally Hezbollah also has received large amounts of crypto funds. It is therefore hard to say how much the reputation will be affected during the war. The founder of Andurand Capital Management LLP Pierre Andurand, believes that the war may affect the oil supply. This in turn may affect price fluctuations and supply disruptions. 

Also Read- Potential Impact of AI on the Cryptocurrency Market

Bottom Line

Israel-Hamas conflict may intensify over the next few days. The Israeli authorities have found out many Palestinian terrorist outfits have benefitted from cryptocurrency. Fortunately, many cryptocurrency companies have cooperated with the Israeli government to freeze those accounts. It is also true that the price of cryptocurrencies has fluctuated and the impact has been minimal. Similarly, the role of cryptocurrencies as safe havens in times of geopolitical disturbances is also open to different interpretations.