The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has dropped 2.1% to $75,633, while ether has fallen 3.4% to $2,244. This decline is attributed to the significant increase in Brent crude prices, which have jumped 7.1% to $126.41 a barrel - the highest level in four years.
The rise in oil prices is a result of President Trump being briefed on new military options against Iran, sparking fears of an escalation in the conflict. As a result, a war premium has been factored into the price of assets, driven by the risk of conflict rather than supply and demand fundamentals. The global benchmark for oil has been on a nine-day winning streak, with prices increasing by over 100% year-to-date. 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.
In contrast, dogecoin has seen a 3.8% increase in value. The surge in oil prices has also impacted the broader market, with risk assets experiencing losses across the board. The dollar has gained value, while bonds have declined, and Treasury 10-year yields have remained near their highest level since July.
Bitcoin's ability to withstand the early stages of the war is being put to the test, with the asset struggling to break above the $80,000 level. According to Fernando Lillo, director at exchange Zoomex, a break above $80,000 would require the war premium to unwind and a resolution to the Middle East conflict. Lillo suggests that a potential lifting of restrictions in the region and lower oil prices could trigger a relief rally, paving the way for Bitcoin to consolidate above $80,000 and move towards $85,000.