The Impact of Middle East Conflict on Crypto-Market Study Case Palestine-Israel War and Bitcoin

Abstract

The aim of this study is to analyze the effects of geopolitical events on Bitcoin's performance. It focuses on the events that occurred from October 7, 2023 including the attack on Israel by the militant group Hamas, the tension between Iran and Israel, and the conflict between Palestine and the US. Through a comprehensive event study, we can analyze the returns generated by these events. The results of the study revealed that Bitcoin performed well during the adjustment and anticipation periods, which showed that it could be a safe-haven asset. On the other hand, the negative AAR during the event day reflected the market's first reaction. The study also highlighted Bitcoin's dual nature as a speculative asset and a safe-haven asset providing investors with a deeper understanding of the risks that affect the cryptocurrency market. This paper examines the profound and far-reaching impact that wars have on crypto markets specific Bitcoin, with specific emphasis on the abstract nature of this impact. It seeks to shed light on the intricate interplay between warfare and the functioning of crypto markets with applying Eventstudy methodology.