The resurgence of the Iran war premium has negatively impacted the cryptocurrency market. Over the past 24 hours, bitcoin declined 2.1% to $75,633, while ether dropped 3.4% to $2,244.
This downturn is attributed to the recent surge in Brent crude oil prices, which reached a four-year high of $126.41 a barrel. The increase in oil prices is largely due to reports that President Donald Trump is being briefed on potential military options against Iran.
As a result, the global benchmark for oil has experienced a nine-day winning streak, with prices rising over 100% year-to-date. The war premium, which refers to the portion of an asset's price driven by conflict risk, has been a significant factor in the recent price increases. Other cryptocurrencies, such as XRP and Solana, have also experienced declines, while dogecoin saw a notable increase of 3.8% on the day. The current market trends suggest that risk assets are losing value across the board, with the Nasdaq 100 futures and European equities also experiencing declines.
The rise in oil prices and a hawkish Fed have led to a decrease in demand for fixed income, resulting in higher Treasury 10-year yields. Bitcoin's ability to withstand the early stages of the war is being tested, and the asset has held a tight band between $74,000 and $78,000. However, each escalation headline has produced a sharper drawdown, and the cumulative damage is starting to show. According to Fernando Lillo, director at exchange Zoomex, any break above $80,000 would require the war premium to unwind and a resolution to the Middle East conflict.
Lillo suggests that a possible scenario where the Trump administration lifts the blockade in coming days could trigger an accelerated influx of capital into risk assets, paving the way for Bitcoin to consolidate above $80,000 and move toward $85,000.