What started as an Israeli strike on Iran hours earlier has escalated into the broadest Middle Eastern military conflict in decades, posing a risk to financial markets, including cryptocurrencies.

Per reports on Bloomberg, CNN and Reuters, Iran launched waves of missiles and drones targeting not just Israel but U.S. bases and interests across the Gulf. Bahrain confirmed an American military base had been attacked. Qatar and the UAE said they intercepted missiles over their territory. Explosions were heard in Dubai. Bahrain closed its airspace entirely.

Iran's semi-official Tasnim news agency said all U.S. bases and interests in the region would be targeted.

President Trump said the U.S. had begun "major combat operations in Iran" aimed at eliminating the country's missile inventory, navy, and nuclear infrastructure. "The lives of courageous American heroes may be lost and we may have casualties," he said. "That often happens in war."

Bitcoin, which had already fallen below $64,000 on the initial Israeli strikes, held above $63,000 as the retaliatory wave hit. The relative stability is partly mechanical. Weekend liquidity is thin, and many leveraged positions that would amplify a sell-off were already flushed during the week's slide from $70,000.

But the real test comes when traditional markets reopen on Monday. Bitcoin tends to absorb the first wave of geopolitical selling because it's the only large liquid asset that trades on a Saturday afternoon.

Equities, oil, and bonds don't have that option until Sunday evening futures or Monday's open. If those markets gap sharply lower, bitcoin could face a second wave of risk-off selling as portfolio managers de-risk across all asset classes simultaneously.

That could potentially open a path to $60,000 or lower.

Previous Middle East escalations have followed a pattern where bitcoin drops on the initial shock and recovers once traditional markets absorb the news and the situation appears contained. Iran's retaliatory strikes on Israel in April 2025 played out that way. So did earlier tensions in 2020.

This time the containment thesis is much harder to make. Missiles landing in Dubai, Kuwait, and Bahrain isn't a bilateral exchange. It's a regional war touching some of the most economically sensitive territory on the planet.

The downside risk is straightforward. If the conflict broadens, oil prices could surge on both sides of the Atlantic, potentially leading to global risk aversion and deeper losses in bitcoin. While the cryptocurrency is often seen as digital gold, it has historically traded more like a risk asset, not a safe haven.

The $60,000 floor that held during the Feb. 5 crash becomes the next line of defense, and it will be tested under far more severe conditions than a leverage flush.