Opinion: The Adoption of Cryptocurrencies in the Middle East Accelerated by Wars and Weak Currencies

The adoption of cryptocurrencies in the Middle East has noticeably accelerated against the backdrop of military conflicts, currency instability, and restrictions of the traditional financial system. Zaid Belbagi, managing partner at London’s Hardcastle Advisory, concluded in an analysis for the Bitcoin Policy Institute that digital assets in the region are increasingly used not as a trendy investment tool, but as a means to preserve and quickly transfer capital.

According to the Bitcoin Policy Institute, the annual volume of on-chain transactions in the region grew from about $100 billion in 2022 to around $350 billion in 2025-2026. This is a sharp increase for the market, especially considering that the reasons for growth here differ from the global picture.

While in developed markets, including the United States, interest in digital assets is often linked to institutional investments and regulatory changes, the Middle East and North Africa have followed a different trajectory. The main factors appeared to be:

• Macroeconomic pressure.
• Devaluation of national currencies.
• Government programs for digitalization.

How the Market Reacted to the Israel-Iran Conflict

Zaid Belbagi separately analyzed how the crypto market behaved after the escalation between Israel and Iran in June 2025. Immediately after the first strikes, Bitcoin dropped by about 2.3% to $105,200. Ethereum lost 7.5%.

The total market capitalization of the entire crypto market decreased by 3.7% during this period. However, the subsequent dynamics turned out to be more restrained: the price of the first cryptocurrency stabilized in the range of $104,000-$106,000, and Bitcoin's share of the total capitalization rose to 64.8%.

In Belbagi's view, this resembles a flight of investors from riskier altcoins to Bitcoin: against the backdrop of geopolitical stress, market participants sought to reduce portfolio volatility and chose an asset that was perceived as more stable within the crypto sector.

An important distinction was the continuous operation of crypto platforms. Stephen Coltman, a representative of 21Shares, whose opinion is cited by BPI, noted episodes from 2026: during strikes on the United Arab Emirates, local stock exchanges suspended trading, while platforms for digital asset operations continued to operate.

Two Scenarios for Cryptocurrency Adoption in the Region

Cryptocurrency in the countries of the region is developing not according to a single model. Belbagi identifies two main scenarios that depend on the economic situation, level of regulation, and trust in national currencies.

• In Egypt, Turkey, Lebanon, and Iran, demand for Bitcoin and dollar stablecoins is increasing due to the devaluation of local currencies and restrictions of the banking system. In this model, digital assets are more often needed for preservation and quick capital transfer.
• In the United Arab Emirates and Bahrain, growth is supported by clear rules, institutional participants, and government programs for economic diversification. In the UAE, this is already noticeable in everyday payments through trading services.

These differences are also evident in Chainalysis data for 2025. In the United Arab Emirates, the volume of small crypto payments through trading services for amounts under $1,000 grew by 88.1% during the reporting period. Analysts linked this to the expansion of everyday use of digital assets.

Turkey showed a different picture. According to Chainalysis, the country became the regional leader in annual cryptocurrency transaction volume—around $200 billion. The most noticeable interest was in altcoins, where researchers observed a rise in speculative activity.

By mid-2025, the average daily turnover of altcoins, smoothed over 31 days, exceeded $240 million. At the end of 2024, this figure was about $50 million. Such a jump indicates that some market participants began to seek returns through riskier instruments.

Pressure on Income Changes Investor Behavior

The purchasing power of the population in several countries has decreased, affecting the behavior of retail users. According to Chainalysis, some investors began to take on greater risks in hopes of compensating for losses from inflation and the weakening of national currencies.

At the same time, retail transfers in small categories decreased. The volume of transactions up to $1,000 fell by 2.3%, while transfers from $1,000 to $10,000 decreased by 1.6%.

In Iran, analysts observed another important trend—the 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. This indicates the complication of the routes for the movement of funds and more complex access to global infrastructure.

Previously, Bitwise's investment director Matt Hougan and research head Ryan Rasmussen stated that the conflict in Iran brought Bitcoin closer to the role of a real means of payment. Against the backdrop of regional instability, this assessment fits better into the overall picture: digital assets are becoming for some users not only an investment object but also a working financial tool.

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