The resurgence of the Iran war premium has had a profound impact on the cryptocurrency market. Over the past 24 hours, bitcoin has declined by 2.1% to $75,633, representing a 3% loss over the week. This downturn is largely attributed to the surge in Brent crude oil prices, which have jumped 7.1% to $126.41 per barrel, the highest level in four years.
The primary catalyst for this increase is an Axios report indicating that President Donald Trump is scheduled to receive a briefing on potential military options against Iran. Furthermore, the US Central Command has requested the deployment of hypersonic missiles to the Middle East, which would mark the first instance of American forces utilizing these weapons in combat. The Strait of Hormuz has been effectively closed since the onset of the conflict in late February, severely disrupting the flow of crude oil, natural gas, and other petroleum products. The war premium, which refers to the component of an asset's price driven by conflict risk rather than fundamental supply and demand, has been a significant factor in Brent crude oil prices this year, with prices increasing by over 100% year-to-date.
The global benchmark is currently experiencing a nine-day winning streak, the longest since May 2022. Other cryptocurrencies, including ether, XRP, and Solana, have also experienced declines, with ether dropping 3.4% to $2,244 and XRP falling 2.1% to $1.37. In contrast, dogecoin has seen a significant increase, rising 3.8% on the day and 10.1% over the week to $0.10.
The surge in oil prices and a hawkish Fed have led to a decline in risk assets, with the Nasdaq 100 futures erasing earlier gains and European equities poised to drop 1% at the open. The dollar has gained, while bonds have slid, with Treasury 10-year yields holding near the highest level since July.
Bitcoin's ability to withstand the initial stages of the conflict is being tested, with the asset having maintained a narrow range between $74,000 and $78,000 throughout April. However, each escalation headline has resulted in a sharper drawdown, and the cumulative damage is beginning to manifest. Fernando Lillo, director at exchange Zoomex, noted that any break above $80,000 would require the war premium to unwind, stating that bitcoin is attempting to break the key $80,000 level, which would necessitate a resolution to the Middle East conflict and a corresponding drop in Brent crude oil prices below $100 per barrel.