Bitcoin Holds Steady Amid US-Iran Strikes as Polymarket Faces Insider Trading Scandal

The weekend of February 28 to March 1, 2026 will be remembered. As the United States and Israel launched massive strikes on Iran, financial markets were shaken. Bitcoin, often touted as “digital gold,” initially plunged before bouncing back — outperforming US stock indices. But another event captured attention: anonymous accounts on Polymarket raked in over a million dollars betting on the strikes just hours before they happened.

Between Bitcoin’s resilience, the safe-haven debate, and an insider trading scandal on prediction markets, here’s a breakdown of a weekend that rocked the cryptosphere.

Bitcoin vs. the Iran strikes: plunge then rebound

US-Israeli military operations against Iran began on the night of Saturday, February 28. Targets included: nuclear facilities, ballistic sites, and key military leaders. Iran’s response — missiles and drones against US assets in the Middle East — sparked fears of regional escalation.

Bitcoin reacted immediately. In less than an hour, its price dropped from $65,572 to $63,176, a nearly 4% decline. Liquidations reached $490 million in 24 hours according to CoinGlass, including $196 million on Bitcoin and $132 million on Ethereum.

But unlike traditional markets, the bounce was swift. By Sunday evening, BTC had climbed back to $66,600, almost fully erasing its losses. A remarkable resilience compared to US index futures (Nasdaq, S&P 500) which were still showing losses above 1% at the Asian open.

Safe haven or risk asset? The debate reignites

Bitcoin’s reaction to geopolitical tensions reignites a recurring debate: is it a safe haven like gold, or simply a risk asset that tanks with stocks?

This weekend’s data suggests a middle ground. Ryan McMillin, Chief Investment Officer at Merkle Tree Capital, observes that “the initial sell-off was almost textbook: markets hate uncertainty more than bad news. The moment the conflict looked contained, the reflexive bid came back fast.”

One technical indicator stands out: the Fear and Greed Index dropped to 11 (extreme fear), while Bitcoin futures funding rates plunged to -6%. This setup — where shorts pay a significant premium — hadn’t been seen since BTC traded at $16,000 in 2022.

“The market is mechanically paying you to be long. It’s time to get long,” McMillin says.

The oil shadow over crypto

The real risk lies in oil prices. Brent jumped 8-10% toward $80 per barrel, its biggest surge since the Ukraine invasion in 2022. The reason: the Strait of Hormuz, through which one-fifth of global oil flows, is “effectively closed” according to Bloomberg.

Pratik Kala, Head of Research at Apollo Crypto, warns: “If oil stays elevated, inflation could return, forcing the Fed to keep rates high — which is historically toxic for Bitcoin.” He tempers this by noting that Trump will do “everything in his power” to keep prices low, knowing the impact on American sentiment.

Arthur Hayes: “War = monetary easing = bullish Bitcoin”

BitMEX co-founder Arthur Hayes published a provocative essay on March 2 titled “iOS Warfare.” His thesis: every US conflict in the Middle East since 1985 has been followed by Fed monetary easing.

Hayes cites three historical precedents:

• Gulf War (1990): The Fed cut rates in November and December 1990, despite oil-driven inflation
• September 11, 2001: Emergency 50 basis point cut by Alan Greenspan
• Afghanistan (2009): Rates already at zero, quantitative easing underway

According to him, regime change in Iran has been a “bipartisan objective since 1979,” giving the Fed political cover to print money. Conclusion: medium-term, the conflict would be bullish for Bitcoin.

Hayes nonetheless recommends caution short-term: “We don’t know how long Trump will remain interested in spending billions reshaping Iran. The prudent action is to wait for an actual rate cut.”

Polymarket: the insider scandal

While Bitcoin was on a rollercoaster, another drama was unfolding on Polymarket, the decentralized prediction market platform.

An investigation by Bubblemaps, shared on X, reveals that 6 freshly created accounts bet on US strikes just hours before they happened. Total profit: $1.2 million.

The “Magamyman” case: $87,000 → $515,000 overnight

California Democratic Representative Mike Levin highlighted a particularly suspicious account: “Magamyman.” This trader placed bets when strike probability was only 17%. Result: “roughly $87,000 turned into over half a million dollars overnight.”

Even more troubling: this account’s first trade came 71 minutes before the information went public.

Trump Jr. and conflicts of interest

Mike Levin points out an embarrassing fact: “Donald Trump Jr. sits on Polymarket’s advisory board, and his company invested tens of millions of dollars in the platform last year.”

The representative warns: “Prediction markets cannot become a way to profit from privileged information about military actions.”

The affair echoes other recent controversies. Donald Trump himself has been accused of considering his presidential status as implicit exemption from insider trading rules — a position that seems to “encourage” such practices.

Kalshi: the Khamenei market and fee refunds

Competitor platform Kalshi, regulated in the US, faces its own controversy. Its “Ali Khamenei out as Supreme Leader” market allowed bets on the Iranian supreme leader’s fall.

Problem: the rules included a “carve-out” (exception) in case of Khamenei’s natural death, which sparked outrage among traders. CEO Tarek Mansour had to publicly defend the market design while announcing remedial measures:

• Full refund of all market fees
• Positions opened before Khamenei’s death: settlement at last traded price
• Positions opened after: full refund of entry cost

Key takeaways from this chaotic weekend

This weekend illustrates two contradictory facets of the crypto ecosystem:

On the Bitcoin side, encouraging resilience. Despite an initial drop, BTC held up better than traditional stocks. The Fear Index in extreme territory and negative funding rates suggest a potential bottom. Arthur Hayes’ thesis — war = money printing = bullish Bitcoin — deserves attention medium-term.

On prediction markets, serious questions. Are Polymarket and Kalshi, presented as tools of “collective wisdom,” becoming casinos for insiders? The Magamyman affair and Trump circle ties fuel suspicions.

For crypto investors, the message is twofold: watch the Fed and oil for Bitcoin, and stay vigilant about prediction platform integrity.