The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has declined by 2.1% to $75,633, representing a 3% decrease over the week. This downturn coincides with a significant surge in Brent crude, which has jumped 7.1% to $126.41 per barrel - its highest intraday level in four years. The escalation in oil prices is attributed to an Axios report stating that President Donald Trump is scheduled to receive a briefing on new military options against Iran.
The report also mentions that the U.S. Central Command has requested the deployment of hypersonic missiles to the Middle East, which would be the first combat use of such weapons by American forces. As a result, the Strait of Hormuz has been effectively shut down since late February, disrupting the flow of crude, natural gas, and oil products. The 'war premium' - the portion of an asset's price driven by conflict risk rather than supply-demand fundamentals - has been a significant factor in Brent's price this year, with the global benchmark experiencing a 100% increase year-to-date.
Currently, Brent is on a nine-day winning streak, its longest since May 2022. Ether has dropped 3.4% to $2,244, with a 4.4% decrease over the week. Other cryptocurrencies such as 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 on the day and a 10.1% increase over the week.
The downturn in risk assets is a widespread phenomenon, with the Nasdaq 100 futures erasing an earlier 1.1% rally and the MSCI's Asia Pacific share index falling 1.4%. The surge in oil prices, combined with a hawkish Fed, has led to a decrease in demand for fixed income, resulting in the dollar gaining and bonds sliding. The 10-year Treasury yields have held near their highest level since July, while Japan's 10-year notes have reached their highest level since 1997. Bitcoin's ability to withstand the early stages of the war is being put to the test, with the asset struggling to break the $80,000 level.
Fernando Lillo, director at exchange Zoomex, notes that any break above $80,000 would require the war premium to unwind. According to Lillo, a possible scenario where the Trump administration lifts the blockade in the coming days could trigger a relief rally, potentially paving the way for Bitcoin to consolidate above $80,000 and move towards $85,000.