Israel’s Defence Minister Israel Katz confirmed that US warplanes conducted airstrikes on Iran using Israeli military bases as a launchpad. The announcement, coming amid a sharp escalation in Middle East tensions, sent immediate shockwaves through financial markets, with crypto bearing a disproportionate share of the pain.

The strikes, which began on February 28, 2026, were characterized by Israeli officials as pre-emptive in nature. Katz subsequently declared a state of emergency in Israel, signalling that the government considered the security situation severe enough to warrant extraordinary domestic measures.

What actually happened

Katz followed up on the diplomatic track on July 16, 2026, speaking directly with US Defense Secretary Pete Hegseth to discuss the ongoing operations in Iran. That conversation confirmed that the coordination between Washington and Jerusalem was not a one-off tactical decision but part of an active, ongoing military campaign.

Israel had already signalled its readiness for both independent and joint military actions against Iran in the weeks leading up to the strikes. The February 28 operation was not a surprise to anyone who had been watching the build-up.

Crypto takes the hit

Bitcoin fell below $64,000 in the immediate aftermath of the strikes. The broader crypto market lost $128 billion in value following the US-Israeli military action.

Ether also saw significant selling pressure, tracking Bitcoin’s decline as traders rotated out of risk assets broadly.

What this means for investors

The $128 billion market cap loss is a reminder that crypto is not operating in a sealed ecosystem. A military operation in the Middle East can move Bitcoin by double-digit percentages within hours.

The fact that Katz was still in active communication with Hegseth as recently as July 16, 2026, discussing ongoing operations, suggests the conflict is not in a wind-down phase.

What to watch going forward: any signal from Tehran about retaliatory intentions, further statements from Hegseth or Katz about the scope of ongoing operations, and whether Bitcoin can reclaim the ground lost below $64,000 during a period of sustained military tension.