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, with its weekly decline now standing at 3%. This downturn is attributed to the substantial 7.1% increase in Brent crude oil prices, which have reached a four-year high of $126.41 per barrel. The catalyst for this surge is an Axios report indicating that President Donald Trump will receive a briefing on potential military actions against Iran.
Furthermore, the deployment of hypersonic missiles to the Middle East has been requested by U.S. Central Command, marking a potential escalation in the conflict. The resulting war premium, which refers to the portion of an asset's price driven by conflict risk rather than fundamental supply and demand, has been a significant factor in the rise of Brent crude prices this year. The global benchmark has experienced a nine-day winning streak, representing its longest stretch since May 2022, with year-to-date gains exceeding 100%.
Other notable declines in the cryptocurrency market include ether, which has fallen by 3.4% to $2,244, and XRP, which has dropped by 2.1% to $1.37. Solana has also experienced a decline of 2.6% to $82.62, while BNB has shed 1.9% to $615. In contrast, dogecoin has seen a 3.8% increase to $0.10.
The sell-off in risk assets is widespread, with the Nasdaq 100 futures erasing earlier gains and the MSCI's Asia Pacific share index falling by 1.4%. European equities are also poised for a decline. The surge in oil prices and a hawkish Fed have led to a strengthening of the dollar and a decline in bond prices. The 10-year Treasury yields have remained near their highest levels since July, while Japan's 10-year notes have reached their highest level since 1997.
Bitcoin's ability to withstand the early stages of the war is being tested, with the asset having held a tight range between $74,000 and $78,000 throughout April. However, each escalation in the conflict has resulted in a sharper decline, with the cumulative damage beginning to manifest. Fernando Lillo, director at exchange Zoomex, has stated that any break above $80,000 would require the war premium to unwind. According to Lillo, a resolution to the Middle East conflict and a subsequent drop in Brent crude oil prices below $100 per barrel are necessary for bitcoin to break the key $80,000 level.
He also flagged a possible scenario where the Trump administration lifts the blockade in the coming days, framing it as a response to positive steps by Iran, which could trigger a relief rally and pave the way for bitcoin to consolidate above $80,000 and move towards $85,000.