The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has fallen by 2.1% to $75,633, representing a 3% decline over the week, as Brent crude oil prices surged to $126.41 per barrel, the highest level in four years, amid reports that President Trump is set to receive a briefing on potential military action against Iran. This development has led to the deployment of hypersonic missiles to the Middle East, marking the first instance of their use in combat by US forces. The resulting 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, which have risen by over 100% year-to-date.
The global benchmark has been on a nine-day winning streak, its longest since May 2022, and has gained over 100% this year. 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 3.8% increase in value over the past 24 hours.
The global market has seen risk assets decline across the board, with the Nasdaq 100 futures and European equities experiencing losses. The US dollar has gained in value, while bond prices have fallen due to the surge in oil prices and a hawkish Federal Reserve. The yield on 10-year US Treasury notes has remained near its highest level since July, while Japan's 10-year bond yield has reached its highest level since 1997. Bitcoin's ability to withstand the early 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 in the conflict has resulted in a sharper decline in bitcoin's value, and the cumulative damage is beginning to show. According to Fernando Lillo, director at exchange Zoomex, a break above $80,000 would require a resolution to the conflict in the Middle East and a subsequent drop in Brent crude oil prices below $100 per barrel. Lillo suggests that the Trump administration may lift the naval blockade of Iran in the coming days, potentially triggering a relief rally and paving the way for bitcoin to consolidate above $80,000 and move towards $85,000.