Cryptocurrency adoption in the Middle East has accelerated significantly amid military conflicts, currency instability, and limitations of the traditional financial system. Zaid Belbagi, managing partner at London-based Hardcastle Advisory, concluded in an analysis for the Bitcoin Policy Institute that digital assets in the region are increasingly being used not as a trendy investment tool, but as a way to preserve and quickly transfer capital.
According to the Bitcoin Policy Institute, the annual volume of on-chain operations in the region grew from about $100 billion in 2022 to around $350 billion in 2025-2026. For the market, this is a sharp jump, 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 was often associated with institutional investment and regulatory changes, the Middle East and North Africa followed a different trajectory. The main factors were as follows:
- Macroeconomic pressure.
- Devaluation of national currencies.
- Government digitalization programs.
How the Market Responded to the Israel-Iran Conflict
Zaid Belbagi separately analyzed how the crypto market behaved after tensions escalated between Israel and Iran in June 2025. Immediately after the first strikes, bitcoin fell by about 2.3% and dropped to $105,200. Ethereum lost 7.5%.
The total market capitalization of the crypto market during this period decreased by 3.7%. However, further dynamics were more restrained: the price of the first cryptocurrency stabilized in the $104,000-106,000 range, and bitcoin’s share of total capitalization rose to 64.8%.
In Belbagi’s view, this looks like investors moving away from riskier altcoins into bitcoin: amid geopolitical stress, market participants tried to reduce portfolio volatility and chose the asset perceived as more stable within the crypto sector.
Another important distinction was the uninterrupted operation of crypto platforms. Steven Coltman of 21Shares, whose opinion is cited by BPI, noted episodes in 2026: during strikes on the United Arab Emirates, local stock exchanges suspended trading, while digital asset platforms continued to operate.
Two Scenarios for Cryptocurrency Adoption in the Region
Cryptocurrency in the region’s countries is developing not according to a single model. Belbagi identifies two main scenarios, which depend on the economic situation, the 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 depreciation of local currencies and restrictions in the banking system. In this model, digital assets are more often needed to preserve and quickly transfer capital.
- In the United Arab Emirates and Bahrain, growth is supported by clear rules, institutional participants, and government economic diversification programs. In the UAE, this is already noticeable in everyday payments through merchant services.
These differences are also visible in Chainalysis data for 2025. In the United Arab Emirates, the volume of small crypto payments through merchant services 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 crypto transaction volume—about $200 billion. The most notable interest was in altcoins, where researchers saw an increase in speculative activity.
By mid-2025, the 31-day smoothed average daily turnover of altcoins exceeded $240 million. At the end of 2024, this figure was about $50 million. Such a jump indicates that some market participants began seeking returns through riskier instruments.
Income Pressure Is Changing Investor Behavior
The purchasing power of the population in a number of countries was declining, and this affected the behavior of retail users. According to Chainalysis, some investors began to take on greater risk in hopes of offsetting losses from inflation and weakening national currencies.
At the same time, retail transfers in small categories decreased. The volume of transactions up to $1,000 fell by 2.3%, and transfers from $1,000 to $10,000 decreased by 1.6%.
In Iran, analysts saw another important trend—a growing isolation of the local crypto market. The average number of intermediary transfers between Iranian services and international exchanges increased from 1.6 in 2021 to 4.1 in 2025. This indicates more complex fund movement routes and more difficult access to global infrastructure.
Previously, Bitwise investment director Matt Hougan and company research head Ryan Rasmussen stated that the conflict in Iran brought bitcoin closer to the role of a real settlement tool. Against the backdrop of regional instability, this assessment fits increasingly well into the overall picture: digital assets are becoming not only an investment object for some users, but also a working financial instrument.
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