Military conflicts and the instability of national currencies have increased interest in cryptocurrencies as a tool for preserving and transferring capital in the Middle East. This conclusion was reached by Zaid Belbagi, managing partner of London-based Hardcastle Advisory, in a report for the Bitcoin Policy Institute (BPI).
According to the organization's estimates, the annual volume of on-chain transactions in the region has grown from approximately $100 billion in 2022 to around $350 billion in 2025-2026.
Unlike the global market, where growth has been driven by institutional investments and regulatory changes, in the MENA region, the drivers are identified as macroeconomic pressure and government digitalization programs.
Digital Sands
Market's Initial Reaction
Belbagi examined the market's reaction to the escalation between Israel and Iran in June 2025. After the first strikes, Bitcoin fell by approximately 2.3% to $105,200, and Ethereum lost 7.5%. The total cryptocurrency market capitalization decreased by 3.7%.
Later, the price of the first cryptocurrency stabilized in the range of $104,000-106,000, and its share of the market capitalization reached 64.8%. The expert interpreted this dynamic as investors shifting from altcoins to Bitcoin to reduce risk.
Separately, he noted the continuous operation of crypto platforms. BPI cites Steven Coltman of 21Shares, who pointed out that during strikes on the UAE in 2026, local stock exchanges suspended trading, while platforms for trading digital assets continued operations.
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Different Reasons for Adoption
Belbagi highlighted two scenarios for the region's development. In Egypt, Turkey, Lebanon, and Iran, the demand for Bitcoin and dollar-pegged stablecoins was linked to currency depreciation and restrictions of the traditional financial system.
In the UAE and Bahrain, growth is supported by regulation, institutional participants, and government economic diversification programs.
Differences between markets were also noted by Chainalysis analysts in their 2025 report. In the UAE, the volume of small crypto payments through merchant services — less than $1000 — grew by 88.1% over the reporting period. Analysts linked this to the expansion of everyday use of digital assets.
In Turkey, the picture was different. The country led the region with an annual crypto transaction volume of around $200 billion, but researchers noted an increase in speculative trading.
By mid-2025, the 31-day smoothed average daily turnover of altcoins exceeded $240 million, compared to approximately $50 million at the end of 2024.
According to Chainalysis, some participants, facing reduced purchasing power, began taking greater risks for returns. At the same time, the volume of transfers in the retail categories below $1000 and between $1000 and $10,000 decreased by 2.3% and 1.6%, respectively.
In Iran, analysts discovered growing isolation of the local crypto market: the average number of intermediate transfers between Iranian services and international exchanges increased from 1.6 in 2021 to 4.1 in 2025.
Recall that in April, Bitwise Chief Investment Officer Matt Hougan and Head of Research Ryan Rasmussen stated that the conflict in Iran has brought Bitcoin closer to the role of a real medium of exchange.
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