The resurgence of the Iran war premium has taken a toll on the crypto market. Over the past 24 hours, bitcoin has slid 2.1% to $75,633, while ether has dropped 3.4% to $2,244.
The decline in crypto prices comes as Brent crude oil has jumped 7.1% to $126.41 per barrel, its highest intraday level in four years, following reports that President Trump is set to receive a briefing on new military options against Iran. The ongoing conflict has resulted in a war premium, which refers to the portion of an asset's price driven by conflict risk rather than supply-demand fundamentals.
As a result, risk assets are experiencing a decline across the board, with the Nasdaq 100 futures and European equities poised to drop. The dollar has gained, while bonds have slid, and Treasury 10-year yields are near their highest since July. Bitcoin's ability to withstand the early stages of the war is being put to the test, with the asset having held a tight band between $74,000 and $78,000 through 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, which would necessitate a resolution to the Middle East conflict and a drop in Brent crude oil prices below $100 per barrel.