The resurgence of the Iran war premium has had a profound impact on the cryptocurrency market. Over the past 24 hours, bitcoin has fallen by 2.1% to $75,633, while ether has dropped by 3.4% to $2,244.
This decline is attributed to the surge in Brent crude oil prices, which have risen by 7.1% to $126.41 per barrel, the highest level in four years. The escalation of tensions between the US and Iran, coupled with reports of potential military action, has led to a significant increase in oil prices.
As a result, the global benchmark for oil has been on a nine-day winning streak, with prices increasing by over 100% year-to-date. The war premium, which refers to the portion of an asset's price driven by conflict risk rather than supply-demand fundamentals, has been a major factor in the recent price surge. Other cryptocurrencies, including XRP and Solana, have also experienced declines, while dogecoin has seen a notable increase of 3.8% over the past 24 hours. The surge in oil prices has had a ripple effect on the broader financial markets, with risk assets experiencing a downturn.
The dollar has gained strength, while bonds have slid, and Treasury 10-year yields have held near their highest levels since July. The resilience of bitcoin is being tested, as it has struggled to break above the $80,000 level.
According to Fernando Lillo, director at exchange Zoomex, a break above this level would require a resolution to the Middle East conflict and a subsequent drop in oil prices. 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.