The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has fallen 2.1% to $75,633, while ether has dropped 3.4% to $2,244. This decline comes as Brent crude oil prices have soared to their highest level in four years, reaching $126.41 a barrel, driven by an Axios report stating that President Donald Trump is set to receive a briefing on new military options against Iran. The report also mentioned that US Central Command has requested the deployment of hypersonic missiles to the Middle East, which would be the first time such weapons have been used in combat by American forces.
The ongoing conflict has resulted in the Strait of Hormuz being effectively shut down since late February, severely impacting the flow of crude oil, natural gas, and other oil products. As a result, a war premium has been factored into the price of Brent crude, which has seen its price increase by over 100% year-to-date. The global benchmark has now seen a nine-day winning streak, its longest since May 2022.
Other cryptocurrencies, including XRP and Solana, have also experienced declines, with XRP falling 2.1% to $1.37 and Solana losing 2.6% to $82.62. The only notable exception is dogecoin, which has seen a 3.8% increase in value over the past 24 hours. Risk assets across the board have given back their gains, with Nasdaq 100 futures erasing an earlier 1.1% rally and MSCI's Asia Pacific share index falling 1.4%. The surge in oil prices, combined with a hawkish Fed stance, has led to a decrease in demand for fixed income, resulting in the dollar gaining value and bonds sliding.
Bitcoin's ability to withstand the early stages of the conflict is being put to the test, with the asset having held a tight range between $74,000 and $78,000 throughout April, despite oil prices rising from $98 to $126. However, each escalation headline has resulted in a sharper drawdown, and the cumulative damage is beginning to show.
According to Fernando Lillo, director at exchange Zoomex, any break above $80,000 will require the war premium to unwind. Lillo noted that bitcoin is attempting to break the key $80,000 level, which would necessitate a resolution to the Middle East conflict and a subsequent drop in Brent crude oil prices below $100 per barrel.
He also flagged a possible scenario where the Trump administration lifts the blockade in the coming days, framing it as a response to 'positive steps' by Iran, which could trigger a relief rally and pave the way for bitcoin to consolidate above $80,000 and move towards $85,000.