Recently, many people have been asking a question: Will the escalation of the Middle East situation change the direction of the crypto market? This question is worth a thorough analysis.

To understand the current situation, we need to look at what Iran has been doing over the past few years. In 2014, Iran abruptly reversed its stance on a major telecommunications agreement negotiated with the US. In 2021, things got even more intense—just after finalizing a $400 billion cooperation framework with the US, Iran turned around and sided with India, handing over the operation rights of Chabahar Port directly to India. This move was essentially shooting itself in the foot, digging a hole for itself, and roasting Pakistan’s Gwadar Port over the fire, disrupting the entire South Asian chessboard. Although Iran eased tensions with Saudi Arabia in 2023, it still maintained a tough stance, often threatening to "blow through the Gulf."

Interestingly, even with the tense situation, Iran is still desperately trying to sway India to its side. But how is capital voting? It’s fleeing on foot to Saudi Arabia. Investment in Iran visibly shrinks, while capital inflows into Saudi Arabia are rising.

What does this phenomenon imply for the crypto space? The most direct takeaway is: capital always prefers wealthier and more stable environments and fears uncertainty. Geopolitical conflicts fundamentally create uncertainty, which markets dislike the most.

From the perspective of the crypto market, how do investors typically react when macro conditions are unstable? Some indeed tend to gravitate toward assets like Bitcoin, viewing it as a safe haven. But this logic doesn’t work as effectively in a highly integrated global financial system. Others simply cut losses and exit risk assets (including altcoins) first.

The key point is that geopolitical events rarely directly determine market trends. The real decisive factor is the shift in risk appetite among capital. When risk appetite declines, liquidity tends to flow from peripheral assets to core assets—this is bad news for altcoins. Conversely, if the situation is eventually controlled or eased, and risk appetite rebounds, altcoins could see significant rebounds.

Therefore, instead of asking "Will Bitcoin hedge risks?" or "Should altcoins be sold off?", it’s better to ask "What stage is capital’s risk appetite in right now?" That is the core of market judgment. In the short term, monitor geopolitical news; in the medium term, observe capital flows; in the long term, focus on technical fundamentals. What we need to do now is keep a close eye on capital movements, rather than being scared off by every piece of news.