The resurgence of the Iran war premium has had a significant impact on the cryptocurrency market. Over the past 24 hours, bitcoin has fallen 2.1% to $75,633, marking a 3% decline over the week. This downturn is largely attributed to the surge in Brent crude 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 direct result of an Axios report stating that President Donald Trump is scheduled to receive a briefing on new military options against Iran.
The potential deployment of hypersonic missiles to the Middle East, as requested by U.S. Central Command, would be the first time American forces have utilized these weapons in combat, further exacerbating the conflict.
The Strait of Hormuz has been effectively shut down since the war began in late February, severely limiting the flow of crude, natural gas, and oil products. This has led to a significant war premium, which refers to the portion of an asset's price driven by conflict risk rather than supply-demand fundamentals. Brent crude has been carrying a substantial war premium all year, with prices increasing over 100% year-to-date. The global benchmark is currently on a nine-day winning streak, the longest since May 2022, and has risen over 100% year-to-date.
Other major cryptocurrencies have also experienced a decline, with ether dropping 3.4% to $2,244 and XRP falling 2.1% to $1.37. Solana lost 2.6% to $82.62, while BNB shed 1.9% to $615.
The only exception in the top 10, excluding stablecoins, is dogecoin, which saw a 3.8% increase on the day and a 10.1% rise over the week to $0.10. Risk assets are experiencing a decline across the board, with Nasdaq 100 futures erasing an earlier 1.1% rally and MSCI's Asia Pacific share index falling 1.4%.
European equities are also expected to drop 1% at the open. The surge in oil prices and a hawkish Fed have led to a decrease in demand for fixed income, resulting in the dollar gaining and bonds sliding.
Treasury 10-year yields are holding near the highest since July, while Japan's 10-year notes have reached the highest level since 1997. Bitcoin's ability to withstand the early stages of the war is being put to the test.
Despite holding a tight band between $74,000 and $78,000 through April, the asset is now $50,000 below its October 2025 all-time high of $126,000. According to Fernando Lillo, director at exchange Zoomex, any break above $80,000 would require the war premium to unwind. Lillo stated that bitcoin is attempting to break the key $80,000 level, which would necessitate a resolution to the Middle East conflict and a subsequent drop in Brent crude oil prices below $100 per barrel. He also noted that a possible scenario where the Trump administration lifts the blockade in the coming days and frames it as a response to 'positive steps by Iran' could trigger a relief rally.
A potential lifting of restrictions in the region and lower oil prices could lead to an accelerated influx of capital into risk assets, paving the way for Bitcoin to consolidate above $80,000 and move toward $85,000.