The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Bitcoin's value decreased by 2.1% over the past 24 hours to $75,633, with a weekly decline of 3%, as Brent crude oil prices jumped 7.1% to $126.41 a barrel, reaching a four-year high, following an Axios report that President Donald Trump is set to receive a briefing on new military options against Iran. The report also mentioned that U.S. Central Command has requested the deployment of hypersonic missiles to the Middle East, which would be the first time American forces have used such weapons in combat.
This development has resulted in a war premium, where the price of an asset is driven by conflict risk rather than supply-demand fundamentals. As a result, Brent crude oil prices have been on a nine-day winning streak, the longest since May 2022, and have increased by over 100% year-to-date. Other cryptocurrencies such as ether, XRP, and Solana also experienced declines, with ether dropping 3.4% to $2,244, XRP falling 2.1% to $1.37, and Solana losing 2.6% to $82.62. The only exception was dogecoin, which saw a 3.8% increase on the day and 10.1% on 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 an earlier 1.1% rally and the MSCI's Asia Pacific share index falling 1.4%. The dollar gained and bonds slid as demand for fixed income decreased.
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 through April despite the conflict entering its third month. Fernando Lillo, director at exchange Zoomex, noted that any break above $80,000 would require the war premium to unwind, and that bitcoin is trying to break the key $80,000 level, which would necessitate a resolution to the Middle East conflict and a drop in Brent crude oil prices below $100 per barrel.