How Would a U.S. Attack on Iran Affect Bitcoin? According to Analysts, Nothing May Be the Same Again

Following the US attack on Iran, analyst Brian Cohen shared a noteworthy scenario analysis regarding the Bitcoin ($BTC) market. Cohen stated that a potential conflict could both reduce the Bitcoin supply and accelerate digital dollarization through stablecoins.

According to the analyst, Iran has long been using Bitcoin not only as an investment vehicle but also as an economic tool due to sanctions. Thanks to subsidized electricity-powered industrial mining operations, the country was converting its energy into Bitcoin, gaining indirect access to the global system. The channeling of some of the produced $BTC through state channels positioned Iran as a regular “marginal seller” in the market.

Cohen stated that damage to mining infrastructure in Iran in a potential conflict scenario could lead to a temporary drop in global hashrate. This could reduce the amount of new Bitcoin entering the market daily, shifting production to more stable countries, particularly Western companies with publicly traded shares and a tendency to accumulate $BTC. He argued that such a shift could signify a transformation from “forced seller to strategic holder.”

On the other hand, the possibility of Iranian-linked crypto reserves being frozen or seized under sanctions also played a significant role in the analysis. According to Cohen, coins that are inaccessible or placed in long-term custody are considered to be out of economic circulation, which means a reduction in liquid supply.

It is stated that if communication infrastructure is damaged after the conflict, low-orbit satellite internet systems could be activated. In particular, it is mentioned that SpaceX’s Starlink network and AST SpaceMobile infrastructure could help restore financial access.

It is believed that if satellite internet access becomes widespread, citizens will be able to directly access global digital markets, cryptocurrency wallets will be actively used via mobile devices, and dependence on the traditional banking system will decrease.

Cohen also drew attention to the possibility of digital dollarization. The analyst noted that regulated stablecoins could be used in place of physical cash in modern restructuring processes, stating that assets like USD Coin, issued by Circle, offer advantages in terms of traceability, programmability, and regulatory compliance. According to the analyst, stablecoins serve as a gateway to the cryptocurrency market. Increased use of the digital dollar could boost wallet penetration and, in the long term, pave the way for a shift in demand for Bitcoin as a store of value.

Cohen likened this process to the 2021 Chinese mining ban. Recalling that hashrate was rapidly shifting westward and corporate ownership was increasing at that time, the analyst argued that a shock originating from Iran could be smaller in terms of hashrate but stronger in terms of geopolitical symbolism.

*This is not investment advice.