We all know your favorite cryptocurrency is volatile, but after the past week, we’ve some historic volatility on our hands. It’s been a pretty outrageous rollercoaster ride, even by crypto’s standards. As geopolitical tensions flared and the media headlines led with fiery predictions of market crash, in the eye of that storm, came a bright spot from the Lone Star State. Nguyen Minh Chau is an experienced watcher of the crypto space. He unpacks the major developments and what they mean for your digital assets.
Geopolitics and Crypto: A Volatile Mix
Geopolitical events tend to have a talent for sending shockwaves through global markets, and cryptocurrency is no different. The recent US airstrikes in Iran underscore how quickly situations can go sideways. This level of volatility creates confusion, increases uncertainty, and harms positive investor sentiment. As investor uncertainty increases, they flock to safe-haven assets. While Bitcoin is usually included among them, due to its growing correlation to traditional markets, it is still susceptible to the effects of market chaos.
The Immediate Impact
We’ve seen how quickly the impact of geopolitical events can affect crypto prices, though this impact is usually short-lived. In fact, in the case of the Israel-Iran Embassy Attack in April of 2024, Bitcoin suffered an immediate -8% plunge. This knee-jerk reaction is nothing unusual as investors begin to gauge the likely economic and political fallout from the crisis. As markets adjust to the initial shock and digest the news, prices may level off and in some instances, they can even recover.
Risk-Off Sentiment and Market Behavior
Bottom line Escalating geopolitical uncertainties tend to trigger a “risk-off” mood from investors. They’re typically quick to pull their capital from speculative or dangerous assets, such as crypto currencies. Instead, they stock up their wealth in safer places like government bonds or gold. According to a recently published work, increased geopolitical risk reduces volatility in Bitcoin markets. This is especially true for very low prices, where the effect is most pronounced. Read volatility to spike in the first order. The presence of nervous investors tends to produce a tempering effect, reducing volatility across the board.
Long-Term Perspective
The short-term effects of geopolitical tensions can be stunningly swift. The long-term impacts on crypto prices are usually much more tenuous and sometimes even zero. Instead, when war broke out between Israel and Hamas in Gaza during October 2023, Bitcoin’s price hardly flinched. Within only 50 days, it didn’t just recover but broke above pre-crisis levels. According to one study, geopolitical risk plays a major role in Bitcoin valuations over long periods of time. In fact, this individual’s contribution to variation could increase to as much as 79% by day 12. Taken together, these examples underline how multidimensional and ever-shifting the relationship between world affairs and crypto markets can be.
Correlation with Traditional Markets
Cryptocurrencies are marketed to the public as outside the control of the central banking system. Yet, they are still subject to spillover effects when equity or bond markets tank. Despite the fact that this correlation between crypto and traditional markets has declined since 2022, it is not gone completely. A major correction in the stock markets is capable of putting downward pressure on crypto prices too. It occurs despite any geopolitical tensions swirling around.
Texas Goes All In: A Strategic Bitcoin Reserve
Among all the international chaos, one good thing happened — a change long sought by Texas agricultural shippers. On June 22, 2025, Governor Greg Abbott signed Senate Bill 21 (SB21), creating the Texas Strategic Bitcoin Reserve. Way to make history Texas! It is now the first U.S. state to implement a program funded by public money to purchase and hold Bitcoin as a state asset.
A Bold Move
Texas takes a big, public leap with taxpayer dollars into Bitcoin. This important decision signals a growing acceptance of cryptocurrency at the institutional level. Though Arizona and New Hampshire had enacted Bitcoin reserves in the past, they limited them to non-public funds. Texas, on the other hand, is going boldly in the other direction, likely establishing a new playbook for states to sue to block federal initiatives.
Transparency and Oversight
To promote public accountability and transparency, SB21 requires a public report every two years detailing the Bitcoin reserve’s holdings and performance. This scorecard will be a meaningful step towards greater transparency about the state’s investment strategy and the success of the initiative as a whole. To further insulate the Bitcoin reserve from periodic treasury fund sweeps, Gov Abbott signed companion bill HB 4488. This bill establishes the reserve’s legal authority, regardless of whether or not a single Bitcoin is ever acquired by the summer of 2025.
Texas: A Crypto Hub
Texas has emerged as a leader in the burgeoning crypto mining industry. The state lures hundreds of blockchain companies thanks to its business-friendly regulatory framework and rich energy reserves. The Texas Strategic Bitcoin Reserve is born. With this step, the state clearly establishes itself as a leading center for digital finance and innovation. This decision might attract many more businesses and investments from the crypto sector to the state. In doing so, it would increase the country’s economic competitiveness and create new opportunities.
VC Funding: A Vote of Confidence
Even with massive market volatility and geopolitical uncertainties, VC firms still can’t stop throwing money at crypto and blockchain-focused startups. In Q1 2025, these firms highlighted their astounding confidence in the industry’s long-term potential by investing an astounding $4.8 billion. In fact, they did 446 transactions in that time, underscoring their focus on growing through acquisitions.
Later-Stage Dominance
Funnily enough, later-stage deals snagged all but a third of capital investment (65%) in just Q1 2025. This indicates that investors are very much seeking opportunities in later-stage and more mature crypto projects, as opposed to the relatively earlier-stage headspace. This trend is indicative of the increasing maturity of the market and a push toward de-risking investments.
Key Players
Leading VC funds including Andreesen Horowitz, Dragonfly Capital, and Multicoin Capital are consistently making investments into blockchain-based companies. These firms have different, if overlapping portfolios, backing cryptocurrency projects like Solana, Coinbase, and Filecoin. This diversification benefits plaintiffs, especially during market downturns. Moreover, it sets them up to capture the benefits of job creation involved with growth based on the burgeoning crypto ecosystem.
Support for Early-Stage Projects
Although later-stage deals are the overwhelming majority of activity now, there are still some BC firms making early-stage investments, such as Gumi Cryptos. This support is essential for growing innovation and encouraging the development of new and promising cryptocurrency technologies. These types of early-stage investments are extremely risky but have the potential for the highest reward.
Navigating the Crypto Storm: Strategies for Investors
Okay, so what does all of this mean for the average crypto investor? How do you invest in an environment of significant volatility and uncertainty while still being able to take advantage of potential long-term appreciation that the market offers? Nguyen Minh Chau offers some actionable advice:
Ride the Wave: Investment Strategies
Dollar-Cost Averaging (DCA): Invest a fixed amount of money at regular intervals, regardless of the market's performance. This strategy helps to reduce the impact of volatility by averaging out your purchase price over time.
Long-Term Investing: Hold assets for an extended period, usually years, to ride out market fluctuations and potentially benefit from long-term growth. This approach requires patience and a strong belief in the underlying value of your investments.
Risk Management
Diversification: Limit crypto exposure to less than 5% of your total portfolio and consider diversifying across different asset classes to minimize risk. Don't put all your eggs in one basket.
Time in the Market: Focus on holding a position for an extended period rather than trying to time the market. Timing the market is notoriously difficult, even for experienced traders.
Technical Analysis
- Moving Averages and Crossovers: Use technical indicators like moving averages and crossovers (e.g., golden cross, death cross) to identify trends and make informed investment decisions. These tools can help you understand market sentiment and potential price movements.
The crypto market is volatile by nature, but the current geopolitical climate has only increased this volatility. Have a better read on what drives crypto prices. Follow a steady-handed investment approach to weather the storm and position yourself to benefit from this dynamic asset class. The best way to protect yourself is to be educated, keep your risk in check, and take a long-term view. The Texas Strategic Bitcoin Reserve has officially been established. At the same time, venture capital continues to flood into the industry, indicating a long-term bullish outlook on crypto in the face of today’s headwinds.
