The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has declined by 2.1% to $75,633, while ether has fallen by 3.4% to $2,244. This downturn is attributed to the significant increase in Brent crude oil prices, which have jumped 7.1% to $126.41 a barrel, the highest level in four years. The rise 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 Strait of Hormuz has been effectively shut down, disrupting the flow of crude oil, natural gas, and other oil products. The war premium, which refers to the portion of an asset's price driven by conflict risk, has been a significant factor in the price of Brent crude oil this year, with prices increasing by over 100% year-to-date. The global benchmark has been on a nine-day winning streak, the longest since May 2022.
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. The only notable exception is dogecoin, which has seen a 3.8% increase in value. The decline in cryptocurrency prices is part of a broader trend, with risk assets experiencing losses across the board.
The dollar has gained value, while bonds have slid, and Treasury 10-year yields have held near their highest levels since July. Bitcoin's ability to withstand the early stages of the war is being tested, with the asset holding a tight band between $74,000 and $78,000 throughout April. 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 will require the war premium to unwind.
Lillo suggests that a resolution to the Middle East conflict and a subsequent drop in Brent crude oil prices below $100 per barrel are necessary for bitcoin to break the key $80,000 level. He also flags 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 an influx of capital into risk assets and pave the way for bitcoin to consolidate above $80,000 and move towards $85,000.