Bitcoin Absorbs War Shock, Rebounds to $67K as Khamenei Confirmed Dead
Bitcoin closed out February battered and bruised, then spent the opening hours of March swinging violently in response to one of the biggest geopolitical shocks in recent memory. The week’s defining story was not on a blockchain — it was in the skies over Tehran.
The Week at a Glance
Bitcoin entered the final week of February consolidating in the mid-$60,000 range after a brutal month that erased more than a quarter of its value. The coin finished February down 28.71%, its worst monthly performance since June 2022. Year to date, bitcoin is down approximately 27% from its January 1 open, having fallen from above $100,000 to a 52-week range that now stretches between $60,187 and $126,186 — the upper end representing the all-time high set in October 2025.
On Saturday, February 28, the United States and Israel launched joint military strikes on Iran, targeting nuclear infrastructure and senior leadership. President Donald Trump confirmed U.S. involvement in a video posted to Truth Social, stating the goal was to “eliminate imminent threats from the Iranian regime.” Iranian state media initially denied reports that Supreme Leader Ayatollah Ali Khamenei had been struck. Then on Sunday morning, they confirmed his death.
Bitcoin’s response followed a now-familiar script for weekend geopolitical shocks. With equity and bond markets closed, crypto served as the primary pressure valve for risk-off sentiment. Bitcoin dropped as low as $62,938 on Saturday — its lowest level since the February 5 flash crash that briefly dipped below $60,000 — before staging a sharp recovery. By Sunday, following confirmation of Khamenei’s death, bitcoin climbed as high as $68,196. Traders interpreted the leadership vacuum as raising the odds of de-escalation, at least in the short term. As of midday Sunday, bitcoin was trading near $67,000, up roughly 5% from its Saturday lows.
The total crypto market shed approximately $128 billion in value in the hours immediately following the initial strikes, according to exchange data. Much of that was recovered by Sunday morning.
ETF Flows: A Critical Week Interrupted
Heading into the weekend, there had been genuine momentum in the U.S. spot bitcoin ETF market for the first time in weeks. After enduring five consecutive weeks of net outflows — the longest such streak since February 2025 — the funds recorded $1.1 billion in net inflows across three consecutive sessions from Monday through Wednesday, according to SoSoValue data. BlackRock’s iShares Bitcoin Trust accounted for roughly half those inflows. That three-day run left the funds approximately $815 million ahead on the week entering Thursday’s session — on pace for their best weekly performance since mid-January.
The five-week outflow streak that preceded this had been severe. Total net outflows from U.S. spot bitcoin ETFs reached approximately $3.8 billion over that period. For the year to date, the funds have shed a net $4.5 billion, offset only by $1.8 billion in inflows during the first and third weeks of January. BlackRock’s IBIT alone saw $2.13 billion in redemptions over the five-week stretch. Fidelity’s FBTC bled $954 million across the same period.
Despite the outflows, the funds’ structural position remains large. Total net assets across the 12 U.S. spot bitcoin ETFs stood at approximately $83.6 billion as of mid-February, representing roughly 6.3% of bitcoin’s total market cap. Cumulative net inflows since the products launched in January 2024 stood at approximately $54 billion.
The question heading into Monday is whether the nascent inflow recovery holds or reverses. Bitcoin ETFs open Monday alongside U.S. equity markets, giving institutional allocators their first chance to respond to the Iran conflict in the regulated fund structure. As Hayden Hughes, managing partner at Tokenize Capital, noted: “The real price discovery happens Monday when U.S. equity markets and Bitcoin ETFs reopen.”
Macro Context: Gold Up, Equities Down, Hormuz in Focus
While bitcoin whipsawed through the weekend, other markets rendered a clearer verdict. On Hyperliquid perpetual contracts — which allow near-24/7 price discovery across traditional asset classes — gold surged more than 5% to above $5,300 per troy ounce. Crude oil futures jumped approximately 6.2% to $70.6 per barrel. U.S. equity index perpetuals fell 1% to 2%.
The Strait of Hormuz remains the key variable. Approximately one-third of global crude oil exports transit the strait, and Iran has repeatedly threatened to close it during periods of regional escalation. A sustained closure would have significant inflation implications, complicating the Federal Reserve’s rate path and likely increasing risk aversion across financial markets — including crypto.
The Fear and Greed Index for bitcoin has been anchored in Extreme Fear territory for the better part of three weeks. Prediction market data from Polymarket showed approximately 62% of participants expecting bitcoin to fall below $50,000 at some point in 2026 — a striking level of bearish consensus for an asset that was trading above $100,000 just four months ago. The bitcoin RSI stood at 42.43 as of early Sunday — technically neutral, though the broader technical picture remains tilted bearish.
Key Levels to Watch
The $60,000 level remains the critical floor. Bitcoin briefly dipped below it during the February 5 sell-off and has since been unable to reclaim and hold the $70,000 range. A decisive close below $60,000 would open the path to the mid-$50,000 range. To the upside, a confirmed move above $70,000 would signal that the weeks of selling pressure may be exhausting itself. Approximately $1.9 billion in bitcoin put options were concentrated at the $60,000 strike on Deribit as of Sunday, signaling persistent institutional demand for downside protection.
What to Watch This Week
Monday’s equity market open is the first test. If U.S. stocks sell off hard on the Iran news, bitcoin ETF outflows are likely to resume and the weekend’s crypto recovery will face a serious challenge. If equities absorb the shock with relatively contained losses — as some traders are hoping, given that Khamenei’s death arguably removes a sustained source of regional instability — bitcoin has the technical setup for a push toward $70,000.
The geopolitical situation itself remains fluid. Iranian counterstrikes targeted Israel, Qatar, the United Arab Emirates, and Bahrain over the weekend, with threats against U.S.-linked bases in Iraq. Whether Iran’s 40-day mourning period affects military tempo is unknown. U.S. strikes were described by Trump as continuing “for as long as necessary.”
Separately, Indiana’s House Bill 1042 — which would allow the state to allocate up to 10% of certain public funds into bitcoin and other digital assets — awaits the governor’s signature. It would make Indiana among the first U.S. states to formally adopt a crypto reserve framework, potentially adding momentum to similar legislation pending in other states.
Standard Chartered has cut its year-end bitcoin price target to $50,000, citing macro headwinds. Long-term holders continue to point to the halving cycle — historically, the 12 to 18 months following a halving have produced significant appreciation, and the April 2024 halving means that window remains open. The divergence in analyst targets — ranging from $50,000 to north of $150,000 for 2026 — reflects genuine macro uncertainty rather than any confusion about bitcoin’s fundamentals.
February is over. March opens with a war, a leadership vacuum in Tehran, a critical ETF flow print on Monday, and bitcoin trading near $67,000. The next 48 hours will tell traders a great deal about whether the worst is behind this market or still ahead.
