Military conflicts and currency instability are accelerating cryptocurrency adoption in the Middle East, with transaction volumes projected to surge.
The ongoing military conflicts and economic instability in the Middle East are driving a notable increase in cryptocurrency adoption, as individuals seek alternatives for capital preservation and transfer. This trend has been emphasized by Zaid Belbaghi, managing partner at Hardcastle Advisory, in a report for the Bitcoin Policy Institute.
As per the institute's projections, the total volume of on-chain transactions in the Middle East and North Africa (MENA) region is expected to escalate from about $100 billion in 2022 to roughly $350 billion by 2025-2026.
This growth contrasts with global trends, which are primarily fueled by institutional investments and regulatory advancements. In MENA, the rise in cryptocurrency usage is largely a response to macroeconomic challenges and initiatives promoting digitalization.
Market Reactions to Conflict Escalation
Belbaghi also examined the market's response to heightened tensions between Israel and Iran in June 2025. Following the conflict's onset, Bitcoin's value fell approximately 2.3% to $105,200, with Ethereum dropping 7.5%. Overall, the cryptocurrency market capitalization experienced a dip of 3.7%.
However, Bitcoin's price subsequently stabilized between $104,000 and $106,000, achieving a market share of 64.8%. Belbaghi interpreted this shift as investors moving from altcoins to Bitcoin to mitigate risks.
Notably, cryptocurrency exchanges in the region maintained their operations while traditional stock exchanges, like those in the UAE, paused trading during military strikes. According to Stephen Coltman of 21Shares, this highlights the resilience of digital asset platforms compared to conventional markets.
Factors Shaping Cryptocurrency Growth
Belbaghi outlines two contrasting scenarios affecting the region's cryptocurrency landscape. In countries such as Egypt, Turkey, Lebanon, and Iran, the appetite for Bitcoin and dollar-linked stablecoins arises from currency devaluation and limitations within the traditional finance sector.
In contrast, nations like the UAE and Bahrain benefit from supportive regulations, active institutional involvement, and government diversification efforts to bolster the crypto ecosystem.
Chainalysis, in its 2025 analysis, highlighted the UAE’s significant growth in small cryptocurrency transactions, noting an 88.1% increase in payments under $1,000, indicative of the growing everyday use of digital assets.
Turkey, however, exhibited a different dynamic, leading the region with an annual cryptocurrency transaction volume of around $200 billion, marked by a surge in speculative trading behavior. The daily trading volume of altcoins surged to over $240 million by mid-2025, increasing from about $50 million at the close of 2024.
As purchasing power waned, some traders ventured into riskier investments, evidenced by a decline in retail transaction volumes for amounts below $1,000 and between $1,000 and $10,000 by 2.3% and 1.6%, respectively.
In Iran, a growing isolation within the local cryptocurrency market was noted, with intermediary transfers between Iranian services and international exchanges rising significantly, from 1.6 in 2021 to 4.1 in 2025. Investment directors from Bitwise also remarked in April that the conflict in Iran has brought Bitcoin closer to being recognized as a valid medium of exchange.
