The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has fallen 2.1% to $75,633, while ether has dropped 3.4% to $2,244. This decline is attributed to the surge in Brent crude oil prices, which have reached a four-year high of $126.41 a barrel. The increase in oil prices is a result of reports that President Trump is being briefed on military options for Iran, leading to a rise in conflict risk.
As a result, a war premium has been factored into the price of assets, driving up the cost of crude oil. The global benchmark for oil has seen 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 losses, while dogecoin has experienced a 3.8% increase. The downturn in the cryptocurrency market is also reflected in the broader risk asset market, with the Nasdaq 100 futures and European equities seeing declines.
The surge in oil prices and a hawkish Fed have led to a decrease in demand for fixed income, resulting in a rise in Treasury 10-year yields. Bitcoin's ability to withstand the early stages of the war is being tested, with the asset struggling to break the $80,000 level.
According to Fernando Lillo, director at exchange Zoomex, a 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 and frames it as a response to positive steps by Iran could trigger a relief rally and pave the way for Bitcoin to consolidate above $80,000.