The resurgence of the Iran war premium has had a profound impact on the cryptocurrency market. Over the past 24 hours, bitcoin has declined by 2.1% to $75,633, while ether has dropped by 3.4% to $2,244. This downturn is attributed to the surge in Brent crude oil prices, which have jumped 7.1% to $126.41 a barrel, the highest intraday level in four years. The increase in oil prices is a result of reports that President Donald Trump is set to receive a briefing on new military options against Iran, which has led to a war premium being factored into the price of oil.
As a result, risk assets, including cryptocurrencies, have seen a decline. 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 seen significant drops, while dogecoin has seen a 3.8% increase. The dollar has gained, and bonds have slid, as the surge in oil and a hawkish Fed have reduced demand for fixed income.
The resilience of bitcoin is being tested, as it has held a tight band between $74,000 and $78,000, despite the escalation of the conflict in the Middle East. According to Fernando Lillo, director at exchange Zoomex, any break above $80,000 will require the war premium to unwind, which would necessitate a resolution to the Middle East conflict and a subsequent drop in oil prices. Lillo also flagged a possible scenario where the Trump administration lifts the blockade in the coming days, which could trigger an influx of capital into risk assets and pave the way for bitcoin to consolidate above $80,000.