Khamenei's death: Investors are concerned about "what's next." The only market open over the weekend has already completed a move from "plunge" to "surge."
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The United States and Israel jointly launched a large-scale military strike, resulting in the death of Iran's Supreme Leader Khamenei, marking the most severe shock to the geopolitical landscape in decades. In the cryptocurrency market, which is open throughout the weekend, prices plummeted before soaring in a "V-shaped" reversal, reflecting deep disagreements among investors over the trajectory of the conflict—the core of this disagreement will be tested when global markets open on Monday.
According to CCTV News, Iran's Supreme Leader Khamenei was killed in an attack on the morning of February 28. Israel claims that Khamenei and his senior aides, including Secretary of Iran’s Defense Council Ali Shamkhani and IRGC Commander Mohammad Pakpour, were all killed in the airstrike.
The cryptocurrency market was the first to reflect shifting sentiment—digital assets plummeted upon news of Israel’s airstrikes on Iran, but surged rapidly after Iranian state media confirmed Khamenei’s death. Historical precedent shows that as long as the market believes the attack is tactical and limited, initial panic is quickly digested; Bitcoin has already chosen to believe in a quick resolution.
Analysis suggests that Monday’s market trend will depend on several key variables: whether the conflict can be swiftly contained, whether crude oil supply suffers substantial shocks, and how the political vacuum left by Khamenei evolves. Analysts and intelligence agencies have outlined three distinctly different scenarios for investors.
Crypto market completes "V-shaped" reversal, official confirmation is the turning point
After the news of Israel's airstrike on Iran broke over the weekend, Bitcoin and other digital assets saw significant declines, reflecting initial risk-off sentiment toward the sudden geopolitical event. As Iranian state media officially confirmed Khamenei’s death, market sentiment swiftly reversed, with major digital assets staging strong rebounds from their lows.
This trend is largely consistent with the market patterns seen after similar shocks in recent years.
Bloomberg statistics indicate that during the last large-scale Israeli strike against Iran, precious metals and energy futures spiked overnight, but as rhetoric softened, markets largely stabilized after opening. After the U.S. killed Islamic Revolutionary Guard Corps commander Soleimani in January 2020, crude oil and gold futures briefly soared before major stock indexes stabilized within days. The common rule from these precedents is: as long as the market judges the attack as tactical and limited, initial panic is quickly digested.
However, Bloomberg macro strategist Michael Ball points out there is an important structural difference this time. Trump’s clear statement that "once the action concludes, Iranians should take back their government" fundamentally changes the "limited strike" narrative framework that markets relied upon, making it hard for investors to apply past pricing models.
Three Scenarios: The Core Disagreement Is Whether War Will Be Prolonged
Analysts summarize three main scenarios for market trends after Monday’s opening, with the central division being whether this military action is a one-off precision strike or the start of a prolonged conflict.
Scenario one: Situation quickly stabilizes, shocks are quickly digested.
If Iran’s retaliation remains limited and shipping through the Strait of Hormuz is unimpeded, investors may interpret the attack as "decisive" rather than "destabilizing."
In this scenario, crude oil and gold would see brief spikes followed by fading volatility, with buyers buying the dip; midweek focus would return to earnings season, AI, and Federal Reserve policy. Historical precedents include the post-Soleimani market movement in January 2020, as well as market reactions to last year’s Israeli "Operation Lion" and US "Midnight Hammer" operations.
Scenario two: Ongoing escalation, repricing of risk premium.
If the situation evolves into a multi-front war with proxies activated in Lebanon, Iraq, Syria, or if Iran tries to blockade the Strait of Hormuz or attack regional energy infrastructure, the market will face fundamental repricing.
Bloomberg macro strategist Michael Ball warns that this would significantly widen the window of uncertainty, push up oil prices and inflation expectations, and force global risk premium to reflect more uncertain growth and inflation backgrounds, rather than a short, tradable shock.
Scenario three: Multiple pressures overlap, systemic risk rises.
If energy prices soar, driving up inflation expectations, U.S. Treasury yields also rise while growth expectations fall, resulting in the stock market’s historically hard-to-digest "stagflation combo."
This scenario is not isolated—last week’s US PPI data was unexpectedly strong, restricting the Fed’s room for easing; early cracks were seen in the private credit market, with bank stocks heavily sold off. Analysts point out that with the current Shiller P/E at about 40, overlapping pressures sharply reduce market tolerance, and once a liquidity event is triggered, assets’ correlations tend to one.
Regime Uncertainty Remains High, Key Divergences in Intelligence Forecasts
According to Xinhua, Iranian media reported on the 1st that after Khamenei’s martyrdom, Iran’s President Pezeshkian, the justice minister, and a jurist from the Guardian Council will lead the country. Trump stated that the U.S. has made "smooth progress" in the airstrike operation and that a diplomatic solution remains "easily" achievable. He already has a "suitable candidate" in mind to lead Iran.
U.S. intelligence agencies had studied multiple political scenarios before launching the air strike. Several intelligence assessments indicate that there’s a significant disparity between the set political objectives of this strike and what the US can actually control in its aftermath.
The New York Times reports that one assessment believes the likelihood of fundamental change in Iran’s government is low; rather, IRGC members may tighten control over the regime, but might be willing to limit their nuclear program or take a more conciliatory stance toward the U.S. Intelligence agencies also believe organized opposition forces inside and outside Iran remain relatively weak.
Senate Intelligence Committee’s ranking Democrat Mark Warner warns he has not seen any new intelligence indicating that it is now any easier to achieve regime change. He also specifically points out that although Khamenei insisted on advancing uranium enrichment, he never decided to proceed to actually build nuclear weapons, and his successor may change this position—thus, the risk of nuclear threat could rise, not fall. Intelligence assessments also show that whoever formally takes over as religious leader will be a hardliner, but their actual influence remains uncertain.
Former Rand Corporation researcher Alireza Nader also says that US-Israeli war planners may have underestimated the resilience of the Iranian regime and its "ability to cause significant harm to all parties."
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