The resurgence of the Iran war premium has had a significant impact 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 jumped 7.1% to $126.41 per barrel, the highest level in four years. The increase in oil prices is a result of reports that President Trump is being briefed on potential military options against Iran, leading 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 declines, while dogecoin has seen a 3.8% increase.
The rise in oil prices has led to a decline in risk assets, with the Nasdaq 100 futures and European equities experiencing losses. The dollar has gained, and bonds have slid, as the surge in oil and a hawkish Fed have reduced demand for fixed income. Bitcoin's ability to withstand the early stages of the war is being tested, 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.