The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has fallen 2.1% to $75,633, while ether has dropped 3.4% to $2,244.
This downturn is attributed to the significant increase in Brent crude oil prices, which have jumped 7.1% to $126.41 a barrel, the highest intraday level in four years. The surge in oil prices is a result of reports that President Donald Trump is set to receive a briefing 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 over 100% year-to-date. Other cryptocurrencies such as XRP and Solana have also experienced declines, with XRP falling 2.1% to $1.37 and Solana losing 2.6% to $82.62.
The only notable exception is dogecoin, which has seen a 3.8% increase in value. The downturn in the cryptocurrency market is also reflected in other risk assets, with the Nasdaq 100 futures and European equities experiencing declines.
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. The 10-year Treasury yields have held 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 tested, with the asset holding a tight band between $74,000 and $78,000.
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 requires 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.