The specter of war with Iran has returned, and the cryptocurrency market is feeling the effects. Bitcoin's value plummeted 2.1% over the past 24 hours to $75,633, marking a 3% decline over the week, as Brent crude oil prices surged 7.1% to $126.41 per barrel - the highest level in four years. This increase was triggered by a report stating that President Donald Trump would be briefed on new military options against Iran. The potential deployment of hypersonic missiles to the Middle East, a first for American forces, has contributed to the escalating tensions.
As a result, the Strait of Hormuz has been effectively shut down since late February, severely impacting the flow of crude oil, natural gas, and other petroleum products. This ongoing conflict has led to a significant war premium being factored into asset prices, with Brent crude oil prices rising over 100% year-to-date.
The global benchmark has now experienced a nine-day winning streak, its longest since May 2022. Other cryptocurrencies, such as ether, XRP, and Solana, also saw significant declines, with ether dropping 3.4% to $2,244 and XRP falling 2.1% to $1.37. In contrast, dogecoin experienced a 3.8% increase in value. Risk assets across the board have been impacted, with the Nasdaq 100 futures erasing earlier gains and European equities poised for a 1% decline.
The surge in oil prices and a hawkish Federal Reserve have led to decreased demand for fixed-income assets, resulting in increased Treasury 10-year yields and a rise in the value of the dollar. Bitcoin's ability to withstand the initial stages of the conflict is being tested, with its value having remained within a narrow range of $74,000 to $78,000 throughout April. However, each escalation in the conflict has resulted in sharper drawdowns, and the cumulative damage is starting to become apparent. Fernando Lillo, director at Zoomex, noted that any break above $80,000 would require a resolution to the Middle East conflict and a subsequent drop in Brent crude oil prices below $100 per barrel.
Lillo suggested a possible scenario in which the Trump administration lifts the naval blockade of Iran, framing it as a response to 'positive steps' by Iran, which could trigger a relief rally and pave the way for Bitcoin to consolidate above $80,000 and move towards $85,000.