Stablecoins, Not Bitcoin: On-Chain Evidence of Dollar Demand During Armed Conflicts

Abstract

Which crypto asset absorbs capital flight when armed conflict breaks out? Using on-chain Tether (USDT) transfer volumes from conflict-zone exchanges, we document that stablecoin demand surges 69.86% at conflict onset on the local exchange level, with 48-hour cumulative surges as high as 700%, while Bitcoin fell 6–8% at onset in four of five events. We analyse five escalation events across three active wars (Russia–Ukraine, February 2022; Hamas– Israel, October 2023; Iran–Israel, April and October 2024; US–Iran, February 2026). USDT transfer volumes on the Iranian exchange Nobitex spike at E1, E2, and E5 within 48 hours of conflict onset, while Bitcoin returns are negative on day 0 in four of five events. Voluntary crypto donations to Ukraine confirm the pattern: USDT ($83M) dominates Bitcoin ($41M) by a 2:1 ratio. Three robustness checks address exchange-internal settlement, secular growth and infrastructure heterogeneity. The core finding is on-chain rather than price-based: people under fire want dollars (USDT), not Bitcoin. Sanctions tooling and regulatory attention should re-focus on Tron-based stablecoins.