Geopolitical conflict escalation: Tehran attacked; BTC drops below $63,000; US stocks experience the largest monthly decline in a year

On February 28, 2026, the global financial markets experienced two consecutive shocks within just a few hours. Following Bitcoin falling below $65,000 in early trading and U.S. stocks posting their largest monthly decline in nearly a year, a sudden geopolitical black swan event in the afternoon pushed safe-haven sentiment to new heights.

According to Xinhua News Agency and multiple international media outlets, an explosion occurred in eastern Tehran, with several missiles hitting central targets, including an attack near the office of Iran’s Supreme Leader. Supreme Leader Khamenei was urgently moved to a safe house; simultaneously, Iranian President Pahlavi was targeted in an assassination attempt, which was unsuccessful. Israel later announced that all objectives of its operation against Iran had been achieved. This series of escalating military conflicts further pressured risk assets already affected by macroeconomic data. This article will revisit the timeline and causal chain based on the latest events, analyze market structure and public sentiment divergence, and project possible future scenarios.

Event Overview: From Geopolitical Tensions to Military Strikes

On February 28, 2026, Middle Eastern geopolitical tensions escalated from “deterioration” to “direct conflict.” In the afternoon local time, multiple missiles struck eastern Tehran, targeting sensitive central areas, including near the office of Iran’s Supreme Leader Khamenei. Meanwhile, President Pahlavi survived an assassination attempt, and Israel announced that its objectives had been met. This breaking news immediately impacted global markets: Bitcoin’s price on the Gate platform remained under $65,000, with further declines over 24 hours; U.S. stock futures plunged, and risk aversion surged. Prior to this, Bitcoin had already fallen below $65,000 amid worsening US-Iran tensions and higher-than-expected US inflation data. The Nasdaq and S&P 500 recorded their largest monthly declines since March 2025, down 3.38% and 0.87%, respectively.

Background and Timeline: Path of Escalation

This incident marks a sharp deterioration in US-Iran confrontation since February. On February 17, negotiations between the two sides failed to progress, with US Vice President Vance stating Iran did not respect the US “red line.” In late February, President Trump publicly expressed dissatisfaction with negotiations and signaled that military action might sometimes be necessary. On February 27, US Producer Price Index (PPI) data for January exceeded expectations, reinforcing market expectations of sustained high interest rates by the Federal Reserve and tightening liquidity. At 3 p.m. on February 28, Bitcoin dropped below $63,000, with Nasdaq and S&P 500 experiencing their worst monthly declines since March 2025.

Today’s afternoon attack marked a shift from diplomatic pressure to direct military action. Multiple missiles hit central Tehran, including near the office of Iran’s Supreme Leader, who was moved to a secure location; the assassination attempt on the President further increased political uncertainty. Israel quickly announced that its objectives had been achieved, implying the operation was planned by the Israeli military. These events sharply increased regional war risks, prompting capital flows into safe assets like gold, USD, and US Treasuries, while risk assets such as Bitcoin faced renewed selling pressure.

Data and Structural Analysis: Market Response and Underlying Links

From a data perspective, market reactions follow a clear safe-haven logic. By 5 p.m. on February 28, Gate’s data showed Bitcoin at approximately $63,650, maintaining a volatile downward trend, with a 6% decline over 24 hours. The total crypto market cap shrank further, with some small- and mid-cap tokens experiencing heightened volatility. Tokens like SAHARA rose against short-term narratives, while DENT and others led declines, indicating liquidity polarization.

In equities, although after-hours trading had yet to fully reflect the latest events, S&P 500 futures fell 0.6%, and Nasdaq 100 futures declined 0.9%. The monthly declines for February were locked in: Nasdaq down 3.38%, S&P 500 down 0.87%. Crypto-related US stocks also declined during regular trading: MSTR down 2.95%, Coinbase (COIN) down 2.88%, Riot Platforms (RIOT) down 4.68%.

Notably, despite rising geopolitical risks, Bitcoin did not exhibit the “digital gold” safe-haven behavior but declined alongside tech stocks. This again confirms Bitcoin’s current market positioning: institutional funds view it as a high-risk growth asset, with its price behavior heavily influenced by global liquidity cycles and risk appetite. After the attack, capital flows showed some investors reducing Bitcoin holdings in favor of gold and US Treasuries, with the 10-year US Treasury yield briefly falling below 4%, and gold surpassing $5,300 per ounce.

Public Sentiment and Divergence of Views

Following the event, market discourse centered on several key issues. First, the scale and duration of the conflict: some analysts suggest Israel’s claim of “achieving all objectives” indicates a limited strike, possibly avoiding full-scale war; others argue that targeting the Supreme Leader’s office and the President carries high symbolic significance, making Iranian retaliation almost inevitable and increasing the risk of spiral escalation.

Second, the role of Bitcoin: prominent crypto analysts note that Bitcoin’s short-term movements are highly correlated with Nasdaq, reflecting its tech-stock attributes rather than safe-haven qualities. Data supports this: after the attack news, Bitcoin briefly dipped then slightly recovered but remained under pressure, without a strong rebound like gold. Some community members believe this demonstrates Bitcoin is still in early adoption stages, with macro narratives not yet fully capturing its long-term value.

Third, the market’s future trajectory: some hedge fund traders emphasize that the key variable is not the geopolitical event itself but the Federal Reserve’s response. If oil prices surge due to conflict, inflation pressures will intensify, forcing the Fed to maintain tightening policies, which would be bearish for all risk assets.

Re-examining the Safe-Haven Narrative

The attack provides a “natural experiment” to observe Bitcoin’s asset properties. Data confirms that when genuine safe-haven demand arises, capital prefers traditional assets like gold and US Treasuries over Bitcoin. This suggests the “Bitcoin as digital gold” narrative is not yet mainstream within current market structures and investor perceptions. Bitcoin’s price behavior resembles that of a high-beta tech stock, with volatility driven more by macro liquidity and risk appetite than by geopolitical risks per se.

This insight has profound industry implications: as institutionalization deepens, Bitcoin’s correlation with traditional risk assets may persist, and the narrative of “independent safe-haven” needs longer-term validation and stronger use-case support.

Industry Impact: The Era of Macro-Driven Markets

This incident further underscores the dominance of macro factors in crypto markets. With the proliferation of regulated channels like spot ETFs, institutional funds have become key market drivers. Their risk management models mirror those of traditional assets; when risk events increase volatility, reducing high-volatility assets is standard. Future crypto market volatility will increasingly be dictated by Fed policies, inflation data, and geopolitical developments rather than internal industry narratives.

Additionally, the escalation of conflict may spawn new industry dynamics. Iran, a country with relatively high crypto adoption, may see internal turmoil affecting local digital currency demand. Potential sanctions could push some Iranians toward non-sovereign digital assets as stores of value, creating localized safe-haven demand. Military actions might involve cyber warfare and encrypted intelligence exchanges, with on-chain analytics becoming vital tools for tracking such activities, opening new applications for blockchain data analysis. The importance of information warfare is also rising, with misinformation and disinformation amplifying short-term volatility and challenging high-frequency and algorithmic trading strategies.

Multi-Scenario Evolution

Based on current facts and logic, future market developments could follow these three paths:

Scenario 1: Limited conflict and diplomatic resolution (baseline)

If Israel’s claim of “achieving all objectives” indicates a one-off strike and Iran chooses restraint, the conflict may not escalate into full-scale war. Market sentiment could gradually recover. In this scenario, focus shifts back to Fed policy and macro data. Bitcoin might oscillate between $60,000 and $70,000, awaiting further macro signals in March. Altcoins will continue to diverge; tokens lacking real-world utility may face ongoing liquidity drain.

Scenario 2: Spiral escalation of conflict (risk scenario)

If Iran retaliates strongly—attacking Israeli targets or blocking the Strait of Hormuz—oil prices could surge, inflation expectations worsen, and the Fed might maintain tighter policies. Risk assets would face valuation and earnings pressures. Bitcoin could fall below $60,000, seeking support around $55,000 or lower. ETF capital flows might reverse, creating negative feedback. Gold and USD would benefit.

Scenario 3: Unexpected de-escalation and peace talks (optimistic)

If international mediators quickly intervene and a ceasefire or temporary agreement is reached within days, geopolitical risk premiums could evaporate, leading to a relief rally. However, given inflation pressures, the rebound might be limited. Bitcoin could challenge resistance above $70,000, but a return to new highs would require substantial macro liquidity improvement.

Conclusion

The attack on Tehran, the failed assassination attempt on the President, Bitcoin’s dip below $65,000, and the U.S. stock market’s largest monthly decline in nearly a year—all these events together mark February 28, 2026, as a historically significant day. For the crypto industry, this series of events reaffirms a key fact: markets are now integral parts of the global financial system, sharing liquidity cycles and risk preferences. Macro variables and geopolitical risks are replacing industry narratives as the primary drivers of prices. Until a true safe-haven logic is established, industry participants and investors must reassess asset allocation and risk management frameworks to navigate a macro-driven new era.