CoinW Research Institute

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This article uses the escalation of the US-Iran conflict as a starting point to analyze how a geopolitical event can rapidly transform into a global risk variable within the contemporary financial system. Because the event occurred over the weekend, traditional financial markets were closed, but on-chain markets continued operating. Crypto assets and on-chain commodity contracts were the first to experience sharp fluctuations, completing the initial risk expression; prediction markets directly probabilized war and political changes, achieving real-time pricing of the event's path. After traditional markets reopened on Monday, energy, the US dollar, US Treasury bonds, and risk assets completed systemic confirmation, with risk premiums propagating layer by layer along the macroeconomic chain. The article points out that in the 24/7 digital market environment, risk is no longer priced in only after the market opens. Geopolitics is being financialized in real time; the market is not merely passively reacting to events, but participating in the pricing of risk itself during the event's development.

1. Conflict Escalation: How Geopolitical Events Become Global Risk Variables

Tensions between the US and Iran have escalated sharply recently. Multiple media outlets reported the death of Iranian Supreme Leader Ayatollah Ali Khamenei in an airstrike, triggering a rapid deterioration of the regional situation. The combination of military action and strong statements has quickly transformed the situation from regional friction into a global focus.

Subsequently, Iran's Islamic Revolutionary Guard Corps announced restrictions on ships passing through the Strait of Hormuz. As one of the world's most important energy transportation routes, this crucial hub, which has long carried about one-fifth of the world's crude oil and liquefied natural gas transport, faced a severe risk of being restricted, with many shipping companies suspending passage or choosing alternative routes.

The impact of the conflict is no longer limited to the military sphere. The Middle East is a core region for global energy supply, and disturbances in the Strait of Hormuz will directly drive up energy risk premiums, which will then be rapidly transmitted to global markets through oil prices, inflation expectations, and capital flows.

Therefore, this conflict has become a global risk variable of systemic significance. It affects not only the regional security landscape, but also the energy supply and demand balance, the dollar liquidity environment, and the valuation system of risky assets.

When war escalates into systemic risk, where is the risk first traded? In a structure where traditional markets operate on a time-sharing basis, while on-chain markets operate 24/7, the time sequence of price discovery is changing.

2. Weekend window: On-chain market completes the first round of price discovery.

It's worth noting that this escalation of the conflict occurred over the weekend. When the news broke, most traditional financial markets globally were already closed: spot gold prices were suspended, crude oil futures trading halted, and stock markets were closed. Risk had emerged, but traditional systems were unable to price it immediately. However, on-chain markets remained operational, shifting risk sentiment to a still-open pricing arena.

Crypto assets were the first to experience sharp fluctuations.

Following the news of the conflict, Bitcoin's price briefly approached $63,000 before rebounding to around $66,000, exhibiting significant volatility in a short period. This fluctuation was not simply a matter of safe-haven buying or panic selling, but rather a concentrated game of market expectations regarding risk in the absence of traditional anchors like gold and crude oil. When other assets become untradeable, the crypto market becomes one of the outlets for expressing risk.

On-chain commodity contracts: Risk premiums are formed instantly.

Over the weekend, multiple media outlets reported significant increases in perpetual contracts linked to crude oil, gold, and silver on the Hyperliquid platform: crude oil perpetual contracts rose approximately 5% to around $70.6 per barrel; gold perpetual contracts rose approximately 1.3% to around $5,323 per ounce; and silver perpetual contracts rose approximately 2% to around $94.9 per ounce. Trading volume also surged. Silver contracts saw a 24-hour trading volume exceeding $227 million, and gold contracts approximately $173 million, demonstrating genuine capital participation. These prices are based on real-time market conditions formed in a 24/7 on-chain market, reflecting market participants' immediate assessments of supply risks and geopolitical premiums during traditional market closures.

Monday's opening: Traditional markets "catch up"

When traditional markets reopened, prices quickly adjusted in the direction of the on-chain market over the weekend. International oil prices opened higher on Monday, with Brent crude rising to $82.37 per barrel at one point and WTI crude jumping above $75; spot gold broke through $5,300 per ounce; major global stock index futures generally weakened, putting pressure on risk assets. Prices exhibited a clear time sequence: weekend risks occurred; on-chain markets fluctuated first; and traditional markets completed a larger-scale confirmation and diffusion on Monday.

During the window of time when traditional markets are closed, on-chain markets have taken on the role of expressing the first wave of risks. This structural time lag is changing the pricing rhythm of global risk events.

3. Predicting Markets: For the first time, war is probabilistically predicted in real time.

Polymarket: Explosive Pricing at Conflict Nodes

In this incident, the volume of contract transactions related to the escalation of the conflict on the on-chain prediction platform Polymarket increased significantly.

The series of contracts concerning whether the United States or Israel would strike Iran on a certain day have accumulated a transaction value of over $500 million, with the transaction value on the day of the airstrike alone reaching approximately $90 million, making it one of the largest geopolitical markets in the platform's history.

Following the confirmation of the leader's death, contracts related to " Will Khamenei lose his position as Iran's Supreme Leader before March 31? " were quickly settled, with a transaction value of approximately $57 million. Contracts regarding the long-term political trajectory, such as " Will the Iranian regime collapse before June 30 ?", saw their implied probability rise to nearly 50%, indicating that the market had begun pricing in deeper systemic risks. These data suggest that betting was not sporadic but rather involved concentrated and intense financial participation.

Source: https://polymarket.com/event/khamenei-out-as-supreme-leader-of-iran-by-march-31

Opinion: Multidimensional Pricing of Conflict Paths and Institutional Risks

On Opinion, contracts related to the US-Iran conflict also showed high activity. One type of market directly defines military triggers precisely. For example, the contract " Will the US strike Iran by a certain date? " is defined as "Yes" only if the US military actually hits Iranian territory or official embassies and consulates with drones, missiles, or air strikes; intercepted weapons or other forms of military action are not included. This contract has traded over $12.6 million, demonstrating the market's high level of attention to specific military trigger conditions.

Source: https://app.opinion.trade/search?q=Iran

Another type of market focuses on institutional risk. The question " Khämenei out as Supreme Leader of Iran by…? " prices whether Iran's Supreme Leader Ali Khamenei will lose power within a specific timeframe. The rules incorporate resignation, detention, loss of office, or inability to perform duties as criteria, and use credible media consensus as the basis for settlement, with a trading volume of approximately $12.9 million. Furthermore, markets such as " Will the Iranian regime collapse before XX date? " and " Will the ceasefire between Israel and Iran be broken before XX date? " express probabilistic views of regime stability and ceasefire sustainability, respectively.

While the number of contracts and overall trading volume remain lower than on Polymarket, Opinion exhibits a clearer risk stratification structure: military action, ceasefires, leadership departures, and regime shifts are broken down into multiple independent variables and priced in parallel. War is therefore no longer a single-point question of "whether it will happen," but rather a risk path that can be segmented, quantified, and continuously adjusted. Prediction markets thus become a real-time measurement tool for sovereign risk and institutional stability.

Probability curves serve as a "risk thermometer".

Unlike crude oil or gold, prediction markets do not indirectly express risk through assets; instead, they directly price the probability of an event occurring. When the probability of conflict escalation increases, the odds jump; when the situation eases, the probability falls. The odds curve itself becomes an instantaneous measure of risk sentiment. Some analyses have pointed out that in the hours before the widespread dissemination of airstrike news, a small number of new wallets concentrated on buying related contracts and profited after the event was confirmed. This phenomenon has sparked discussions about whether information enters the market in advance, and has made the time sensitivity of prediction markets particularly prominent.

Traditional markets typically reflect outcomes through rising oil prices or falling stock markets; prediction markets, on the other hand, directly trade whether an upgrade or diffusion will occur. The former influences pricing, while the latter influences pricing paths. Even before traditional markets open, risks are already quantified and bet on on-chain.

4. Confirmation of traditional asset openings: How is the risk premium transmitted?

While the on-chain market experiences initial fluctuations, true cross-asset linkages occur after traditional markets reopen.

Energy: The first stop for risk premiums

Energy remains the first bastion of risk premiums. The Strait of Hormuz handles approximately 20% of global crude oil shipments, and as long as the market is concerned about potential supply disruptions, crude oil prices will already reflect this risk premium. Escalating conflicts drive up oil prices, which in turn increases inflation expectations and influences interest rate policy and corporate cost structures.

The US Dollar and US Treasuries: A Tug-of-War Between Security and Inflation

When uncertainty rises, funds typically flow to the most liquid assets, thus benefiting the US dollar and US Treasuries in the short term. A stronger dollar and a temporary decline in US Treasury yields reflect increased demand for safe-haven assets. However, if the conflict persists and pushes up inflation expectations, US Treasury yields may face a tug-of-war between safe-haven buying and inflationary pressures.

The Positioning of Risky Assets and Bitcoin

Gold serves its traditional safe-haven function, crude oil reflects a risk premium, and US Treasury bonds provide a liquidity safety net. Bitcoin, however, behaves more like a highly volatile risk asset. In the early stages of a conflict, it did not experience a one-sided upward trend but rather fluctuated wildly, demonstrating its high sensitivity to liquidity and risk appetite. Therefore, in the initial stages of extreme uncertainty, Bitcoin behaves more like a high-beta risk asset than a pure safe-haven tool.

Overall, on-chain markets are the first to express risks and predict probabilistic market risks, while traditional assets complete systemic confirmation after opening. Risk premiums are transmitted layer by layer along energy, interest rates, and asset valuations, ultimately forming a coordinated reaction in global markets.

5. Structural Changes: Is the Risk Pricing Mechanism Migrating?

The significance of this incident may lie not only in the conflict itself, but also in how risk is priced.

Geopolitics is being financialized in real time.

In the past, geopolitics remained largely confined to the realms of news and diplomacy; now, it is being financialized in real time. Whether a war will escalate, whether sanctions will be implemented, and how election results will unfold can all be bet on, hedged, and probabilized in the market. Risk is no longer merely interpreted after the fact, but is traded during its occurrence.

On-chain markets serve as a 24/7 risk buffer.

On-chain markets are beginning to take on a new function. Traditional markets are closed on weekends and holidays. When a major event happens to occur during this gap, prices cannot reflect sentiment immediately. But on-chain markets operate 24/7, becoming a buffer for the first wave of sentiment release. Prices and probabilities fluctuate there first, and then a larger-scale confirmation and dissemination takes place when traditional markets open.

Price discovery power is shifting at the margins.

This difference in time structure is bringing about a deeper change: a marginal shift in price discovery power. If on-chain contracts fluctuate first, and if the odds curve for predicting the market jumps before oil prices and stock indices, will institutional investors begin monitoring this data? Will macroeconomic models incorporate on-chain volatility as a reference variable? Will the media and traders view the probability of predicting the market as a risk warning signal?

These questions remain unresolved, but the direction is clear. The "first expression" of risk is shifting from the opening bell of traditional exchanges to 24/7 digital markets. When war can be traded in real time, the market is no longer merely a passive response to the outcome of events, but rather participates in the pricing process of risk itself.

The number of forecast market transactions in March reached a record high of 191 million, representing a year-on-year increase of 2838%.

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