Israel Election Deadlock Risk Puts Crypto on Edge Amid Oil Gains, Rate Pressure

Netanyahu, Eisenkot camps projected to fall short of majority

Coalition talks may stall, clouding military policy toward Iran

Oil gains and rate pressure raise downside risks for crypto

The absence of a clear winner in Israel’s general election is emerging as a new variable for digital assets including Bitcoin, as uncertainty over the Middle East deepens.

The New York Times reported on October 28 that, with about 90% of ballots counted from the previous day’s election, Prime Minister Benjamin Netanyahu’s bloc was projected to win 54 seats, while the camp led by former military chief Gadi Eisenkot was set to take 49. Neither side appears on track to secure the 61 seats needed for a majority in the 120-seat parliament, raising the risk of political deadlock.

The count of regular ballots is nearly complete, and the tally is effectively set to wrap up by the afternoon of October 29. Official results, however, are due on November 4 because absentee ballots cast by diplomats and other voters must still be counted separately.

The crypto market also swung after exit poll results were released the previous day. Bitcoin rebounded from around $80,000 to about $81,200 as reports showed the anti-Netanyahu camp holding a narrow lead. The rally later lost steam as projections indicated both sides would struggle to win a majority, though prices resumed their rebound and continued to fluctuate.

Uncertainty in Middle East Persists as Israel Election Outcome Draws Focus

The vote is drawing attention because the next Israeli government’s policy toward Iran could shape broader tensions in the Middle East. Netanyahu has long emphasized the need for a hard-line military response to Iran and has argued for regime change. Eisenkot, by contrast, supports military action to prevent Iran from developing nuclear weapons while expressing skepticism about using force to topple the regime. In his view, diplomacy should proceed in parallel if needed.

Still, neither bloc is projected to win the 61-seat majority, a result that could prolong coalition negotiations. Under Israel’s system, President Isaac Herzog nominates a candidate to form a government after official election results are announced. That candidate is given up to 42 days, including an extension, to negotiate a coalition. If the effort fails, another candidate gets a chance to form a government. If no government is ultimately formed, a new election could be held, meaning it may take months before a new administration is in place.

A prolonged political impasse in Israel could add to uncertainty over military action against Iran. Whether Israel resumes strikes on Iran and how future operations unfold may depend on the shape of any coalition government. The Times of Israel reported that if Netanyahu fails to form a coalition and remains caretaker prime minister, it could become harder for him to resume attacks on Iran. Commerzbank analysts, meanwhile, wrote that if Netanyahu returns to power, he may seek regime change in Iran, and that the election result will materially affect the course of any war with Tehran.

As uncertainty lingered, oil prices rebounded after just one day of declines. Brent for December settlement rose 1.26% to close at $115.32 a barrel on October 28 on ICE Futures Europe in London. West Texas Intermediate for December delivery climbed 2.88% to $102.78 a barrel on the New York Mercantile Exchange. The contracts had fallen 1.67% and 1.83%, respectively, a day earlier.

Prolonged Middle East Conflict Could Keep Rate-Hike Risks Alive, Weighing on Bitcoin

Analysts said investors should watch how the Israeli election outcome affects both oil prices and US monetary policy through the Middle East outlook. If military tensions intensify and oil rises further, inflation pressure could build. That could limit the Federal Reserve’s room to cut rates or raise the possibility of further tightening, adding pressure to crypto markets.

Kim Min-seung, head of research at DigitalX, said Israel’s political situation does not directly move digital-asset prices such as Bitcoin. But the Middle East conflict affects oil, which then feeds through to US inflation and interest rates. If Israel’s political situation worsens the regional conflict and pushes oil even higher, that could become a bearish factor for Bitcoin by reinforcing expectations for higher US inflation and rates.

Jung Min-kyo, an analyst at Presto Research, said the election result itself matters less for crypto than the possibility that geopolitical uncertainty in the Middle East drags on. Uncertainty over policy toward Iran could persist during coalition talks. If oil stays elevated under those conditions, rate pressure could remain in place and weigh on risk assets broadly, including Bitcoin.