The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Bitcoin's value slid 2.1% over the past day to $75,633, marking a 3% decline over the week, as Brent crude oil prices jumped 7.1% to $126.41 per barrel - a four-year high - following an Axios report that President Donald Trump is set to receive a briefing on potential military action against Iran. The report also stated that the US Central Command has requested the deployment of hypersonic missiles to the Middle East, which would be the first instance of American forces utilizing such weapons in combat.
The ongoing conflict has effectively blocked the Strait of Hormuz, disrupting the flow of crude oil, natural gas, and other petroleum products. This has resulted in a significant war premium, which refers to the portion of an asset's price driven by conflict risk rather than supply and demand fundamentals. Brent crude oil has been carrying a substantial war premium throughout the year, with prices increasing by over 100% year-to-date. The global benchmark has now seen a nine-day winning streak, the longest since May 2022, and is up over 100% year-to-date.
Other cryptocurrencies, including ether, XRP, and Solana, also experienced declines, with ether dropping 3.4% to $2,244 and XRP falling 2.1% to $1.37. The only notable exception was dogecoin, which saw a 3.8% increase in value. Risk assets across the board have been affected, with the Nasdaq 100 futures erasing earlier gains and the MSCI Asia Pacific share index declining 1.4%.
The surge in oil prices and a hawkish Fed have also impacted the dollar and bonds, with the dollar gaining and bonds sliding. Bitcoin's ability to withstand the early stages of the conflict is being tested, with the asset having held a tight range between $74,000 and $78,000 throughout April despite the rise in oil prices and the escalation of the conflict.
However, each new escalation headline has resulted in a sharper decline, and the cumulative damage is beginning to show. Bitcoin is now $50,000 below its October 2025 all-time high of $126,000. According to Fernando Lillo, director at exchange Zoomex, a break above $80,000 would require the war premium to unwind.
Lillo stated that bitcoin's attempt to break the key $80,000 level 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.