The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has fallen by 2.1% to $75,633, while ether has dropped by 3.4% to $2,244. This decline is attributed to the surge in Brent crude oil prices, which have risen by 7.1% to $126.41 a barrel, the highest level in four years. The increase in oil prices is a result of reports that President Trump is being briefed on new military options against Iran, which has led to a war premium being factored into the price of assets.
The global benchmark for oil has been on a nine-day winning streak, with prices increasing by over 100% year-to-date. Other cryptocurrencies, such as XRP and Solana, have also experienced losses, while dogecoin has seen a 3.8% increase in value.
The rise in oil prices has also affected other risk assets, with the Nasdaq 100 futures and European equities experiencing declines. The dollar has gained in value, while bonds have slid due to the surge in oil prices and a hawkish Fed. The resilience of bitcoin is being tested, as it has held a tight band between $74,000 and $78,000 despite the escalation of the conflict in the Middle East. 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 conflict in the Middle East.
Lillo also flagged a possible scenario where the Trump administration lifts the blockade on Iran, leading to a relief rally and an influx of capital into risk assets.