Bitcoin profiting on the returned demand for risk

Bitcoin profiting on the returned demand for risk

Bitcoin has been on a rollercoaster ride. Firstly, quotes fell below the psychologically important round level of 100,000 in response to the United States' bombing Iran. Then, the cryptocurrency recorded one of the best daily rallies in 2025 thanks to Donald Trump's announcement of a ceasefire in the Middle East.

Along with the deterioration of global risk appetite amid the Israeli-Iranian conflict, fears about the growth of token supply put pressure on Bitcoin. Western sanctions are depriving the country of the opportunity to sell traditional assets. To attract resources, it may start selling cryptocurrency. Therefore, Tehran's reduction in oil exports increased the risks of a further decline in Bitcoin prices.

The markets believed in the end of the Twelve-Day War and returned to a positive outlook. The reduction in the number of daily transactions on the Bitcoin network from 600-700K in 2024 to 500K in 2025, with the average payment volume remaining unchanged at $7 billion, is good news. According to Glassnode, this indicates institutional investors' increased interest in digital assets.  

Bitcoin is also supported by consistently high demand for Bitcoin-focused ETF products. Since their launch in January 2024, specialised exchange-traded funds have attracted more than $131 billion.

The turning point in the Israeli-Iranian conflict gives reason to expect a continuation of the rally in US stock indices. The return of the S&P 500 to record highs is strengthening global risk appetite and creating a tailwind for the first Crypto. Events in the Middle East have shown that Bitcoin has not become a hedge against turmoil, as its creators intended.

Nevertheless, the risky nature of cryptocurrency allows you to make good money on it during periods of market prosperity. How long will the current favourable period last? The answer will depend on the end of the war in the Middle East. It will also depend on Donald Trump's unwillingness to escalate trade conflicts. There is not much time left before the end of the 90-day tariff delay. Are the markets and the S&P 500 waiting for a new round of trade wars?

By the FxPro Analyst Team