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Bitcoin has so far absorbed the latest escalation in the Middle East, following a spike in volatility in U.S. futures on Sunday, as traders continue to parse the impact on global energy markets.

U.S.-led strikes on Iranian targets have prompted retaliatory missile and drone attacks, raising fears of a wider regional conflict after reports that Ayatollah Ali Khamenei’s 36-year rule as Iran’s supreme leader had ended. 

Iran has warned of further retaliation, while shipping and aviation disruptions across the Gulf have sharpened concerns that the conflict could extend beyond a limited exchange.

Bitcoin is down 0.4% on the day to $66,600 after reclaiming ground lost over the weekend, when its price fell to as low as $63,000. The asset is down roughly 2.8% on the week, according to CoinGecko data. 

The decline was relatively smaller than losses implied by equity-index futures, which were down more than 1% across the Nasdaq, Dow, and S&P 500. Losses in equity-index futures suggests investors are marking down risk broadly in response to overnight macro and geopolitical developments ahead of the U.S. open.

“Bitcoin’s initial sell-off was almost textbook; markets hate uncertainty more than bad news, and the moment the Iran conflict looked contained, the reflexive bid came back fast,” Ryan McMillin, chief investment officer at Merkle Tree Capital, told Decrypt.

The expert pointed to a Fear and Greed index reading of 11, alongside Bitcoin futures funding rates swinging to -6%, indicating shorts are paying a significant premium to maintain a bearish bias in a situation not seen since Bitcoin traded at $16,000 back in 2022.

“The market is mechanically paying you to be long; it’s time to get long, McMillin said.

Echoing that sentiment, Pratik Kala, head of research at Apollo Crypto, told Decrypt Bitcoin’s price action suggested much of the initial shock had already been reflected. 

“Bitcoin would’ve sold off by now if it had to—the tape through the event over the weekend was very positive. CME futures have also opened, and if Bitcoin were to dump or follow equities, it would have by now,” Kala said.

Broader markets have focused on the potential for disruption around the Strait of Hormuz, the narrow shipping lane that carries roughly one-fifth of global oil supply.

Oil prices have surged sharply on the Iran conflict, with Brent crude jumping roughly 8–10% toward $80 a barrel and U.S. WTI up about 7–8%. 

“If oil stays elevated, there will be a risk to a higher inflation print, which is negative for risk assets—and Bitcoin,” Kala said. “However, I don’t expect that to be the base case.”

Kala cited large oil supplies from OPEC countries that could seek to “plug the gap” and President Donald Trump doing “things in his power” to keep prices low, as “he knows that will turn the sentiment of Americans most.”

Safe-haven gold, meanwhile, has leapt more than 2% to $5,388 per troy ounce. 

“The ongoing Middle East conflict is set to further fuel gold’s tailwinds, likely triggering a knee-jerk price spike on rising safe haven demand.” Han Tan, chief market analyst at Bybit Learn, told Decrypt.

“Still, seasoned market watchers would be well aware that geopolitical risk premiums are often faded out swiftly, once market and economic risks are digested and appear to be contained,” he added.

As tensions escalated over Iran-related headlines this weekend, Hyperliquid’s HYPE token rose about 6% as traders turned to the always-on decentralized perpetuals platform to express risk while many traditional markets were closed.

Bitcoin and other risk assets fell as Iran-related tensions escalated, while oil and gold moved higher amid a broader risk-off shift. Volatility rose, and funding rates turned negative across crypto derivatives markets as traders adjusted positioning.

Hyperliquid is a decentralized exchange that lets traders buy and sell perpetual futures contracts directly on-chain without using a centralized intermediary.

Its native token, HYPE, fell to about $26.2 at the end of February, in line with the broader market pullback, before surging to roughly $32 as volatility picked up on Sunday.

The token is up about 25% year to date, though it remains well below its September peak near $58, per CoinGecko data.

Trading volume over the last 24 hours for the exchange reached a near one-month high on Saturday, rising to a peak of $200 million before dissipating as traders digested the risk premium to global energy markets.

Always-on trading

Hyperliquid was one of the few venues open and liquid as volatility picked up over the weekend, drawing trading activity at a time when equity futures and many centralized crypto platforms were either closed or operating with thinner books.

“As a decentralized perpetuals platform, it was one of the few venues actually open and liquid when the Iran headlines hit, and in a weekend event where centralized venues are closed off to face thin liquidity,” Ryan McMillin, chief investment officer at Merkle Tree Capital, told Decrypt.

Geopolitical shocks “make the case for non-custodial, always-on trading infrastructure,” McMillin added, noting how HYPE appears to sit “at an interesting intersection.”

Hyperliquid’s token “benefits both from volume-driven fee revenue during chaos events and from any broader rotation away from centralised exchange risk,” he said. “It’s worth watching whether weekend crisis volume is becoming a structural tailwind rather than a one-off.”

For HYPE, this ties geopolitical shocks directly to trading volume and fee activity, supporting the view that off-hours crises may become a repeat source of demand.

First response

Decentralized platforms like Hyperliquid’s are increasingly serving as “the first-response venue for geopolitical risk,” Dominick John, analyst at Kronos Research, told Decrypt.

“Institutions leverage these always-on markets to anticipate moves in conventional venues, using on-chain perpetuals to hedge before broader markets open,” John explained, adding that such a function positions decentralized venues “for early risk pricing.”

Weekend geopolitical shocks provide decentralized perpetuals exchanges “a structural edge” that captures “risk-driven flow while TradFi sleeps,” he added.

While platforms like Hyperliquid could serve that purpose, most other perpetual decentralized exchanges, including its own HIP-3 markets, would still need to “achieve much deeper order book liquidity to onboard institutional traders,” Siwon Huh, researcher at Four Pillars, told Decrypt.

On Hyperliquid, new markets require HYPE to be staked, and much of the platform’s fees go toward HYPE buybacks, meaning volatility and trading growth can directly increase demand for the token, which has also shown lower correlation to Bitcoin than many other altcoins, he explained.

“For now, they appear to have already established themselves as highly useful exchanges at the retail level,” Huh said, adding that the weekend geopolitical shocks are likely to “capture demand from liquidity providers requiring hedging at a much larger scale.”

A key Treasury Department bureau released preliminary rules this week detailing how it will implement the stablecoin-focused GENIUS Act—and industry experts are split about whether the proposal could impact America’s top stablecoin rewards program.

On Thursday, the Office of the Comptroller of the Currency, the nation’s top banking regulator, released a massive, 376-page proposed rulemaking detailing how it intends to implement the GENIUS Act, which was signed into law by President Donald Trump last summer.

Among the proposed rules—which are subject to a 60-day public comment period—are multiple sections prohibiting certain types of stablecoin rewards. The prohibitions appear to outlaw certain arrangements between stablecoin issuers and third parties in which the third parties pass yield onto stablecoin holders in connection with their “holding, use, or retention” of the tokens.

That sounds not so far from the current arrangement between USDC issuer Circle and Coinbase. Both companies share revenue from the yield generated on USDC’s reserves, and Coinbase currently offers users roughly 4% yield, essentially a type of interest payment, on their USDC deposits.

Multiple crypto policy leaders told Decrypt they think the OCC’s proposed language could impact Coinbase’s current USDC rewards program, but emphasized the complexity of the proposed rule and the possibility that it could be worked around.

One of the policy leaders said Coinbase was likely always going to need to adjust its USDC rewards program at least somewhat after the implementation of the GENIUS Act. Coinbase did not immediately respond to Decrypt’s request for comment on this story.

Last year, Coinbase reported $1.3 billion in stablecoin revenue. The company cited its USDC rewards program as its key growth driver in 2025.

Some crypto executives have denounced the OCC’s proposed rulemaking, deeming it regressive.

Scott Johnsson, a finance lawyer and crypto-focused venture capitalist, told Decrypt he thinks the language “most likely does” impact Coinbase’s USDC rewards program. But he also expects the rule will be challenged, and changed.

But others have taken a different tune. Circle’s head of global policy, notably, commended the OCC on its proposed regulations—a sentiment echoed by Circle’s CEO, Jeremy Allaire.

“This is all part of accelerating U.S. leadership in transforming the economic and financial system and rebuilding it natively on the internet,” Allaire said.

Perhaps underscoring the possibility that Coinbase and Circle needn’t worry too much about the proposed rules, a banking industry source told Decrypt that the OCC’s announcement does not give them much comfort. The banking lobby has been pushing for months to restrict stablecoin rewards, which it worries could siphon customers away from traditional, low-yield bank accounts. 

“It really doesn’t solve the problem,” the banking industry source said, alluding to potential loopholes in the OCC’s proposed restrictions. The source emphasized that rulemakings “can always be changed.”

The banking industry would rather have restrictions on stablecoin yield permanently enshrined in law, the source said. For over a month, banking and crypto representatives have gone back and forth negotiating the issue of stablecoin yield, as part of negotiations on crypto’s stalled market structure bill. The meetings, led by the White House, were intended to arrive at a deal by this weekend—but a deal is unlikely to materialize so soon, Decrypt reported earlier Friday.

“This doesn’t fix the debate,” Todd Phillips, a law professor at Georgia State focused on bank regulation, said of the OCC’s proposed rules. “This is not going to satisfy the two warring sides.”

The price of Bitcoin rapidly fell overnight as the United States and Israel began joint “major combat operations” in Iran, bombing numerous military targets in what officials said were attempts to end the country’s nuclear and ballistic missile programs, as well as take out key military leaders.

But while Bitcoin plunged from a price of $65,572 to $63,176 in about an hour overnight following word of the strikes, the leading cryptocurrency has mostly recovered that ground in the hours since.

It’s currently trading for $65,051, according to data from CoinGecko, still showing an approximately 0.8% loss on the day and 5.2% fall over the last seven days.

Major altcoins like Ethereum, XRP, and Solana also fell sharply following the overnight attacks, but have similarly made up most of that ground as of this writing, showing daily losses of less than 2% each.

Crypto liquidations surged overnight amid the rapid market plunge, with CoinGlass showing about $490 million worth of positions liquidated over the past 24 hours, led by Bitcoin and Ethereum longs. Overall, Bitcoin positions make up $196 million worth of the liquidations, with Ethereum following at $132 million.

At its overnight low, Bitcoin was approximately 50% down from its all-time high mark above $126,000 set last October. The leading cryptocurrency has fallen sharply over the last month, about 23% during that span. Bitcoin started the year at a price around $87,000.

Crypto prices have historically been impacted by geopolitical turmoil, and this time around is no different. For example, the price of Bitcoin and other assets fell sharply after Russia invaded Ukraine in 2022.

The overnight strikes led Iran to launch retaliatory attacks against U.S. military assets across the Middle East, while Iran reckons with the fallout from the bombings. News agencies have reported mass civilian casualties in Iran, including a reported 85 deaths after a girls school was struck in the Minah province.

Users on Myriad—a prediction market operated by Decrypt‘s parent company, Dastan—increasingly believe that the Iranian regime will collapse before October, currently penciling in a 51% chance of that happening. Those odds rose 20% over the last day.