The resurgence of the Iran war premium has taken a toll on the cryptocurrency market. Over the past 24 hours, bitcoin has dropped 2.1% to $75,633, while ether has fallen 3.4% to $2,244.
This downturn is attributed to the surge in Brent crude oil prices, which have reached a four-year high of $126.41 per barrel. The increase in oil prices is largely driven by reports that US President Donald Trump is being briefed on potential military options against Iran. The deployment of hypersonic missiles to the Middle East, as requested by US Central Command, would mark the first time such weapons have been used in combat.
The resulting war premium has led to a significant increase in Brent crude oil prices, which are now up over 100% year-to-date. The global benchmark has seen a nine-day winning streak, the longest since May 2022. Other cryptocurrencies, including XRP and Solana, have also experienced declines, while dogecoin has seen a 3.8% increase.
The downturn in the cryptocurrency market is mirrored in other risk assets, with the Nasdaq 100 futures and European equities also experiencing losses. The US dollar has gained, and bond prices have slid, as the surge in oil prices 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 holding a tight band between $74,000 and $78,000 despite the escalation of the conflict. Fernando Lillo, director at exchange Zoomex, notes that any break above $80,000 will require the war premium to unwind and a resolution to the Middle East conflict.
A potential lifting of restrictions in the region and lower oil prices could trigger a relief rally, paving the way for Bitcoin to consolidate above $80,000 and move toward $85,000.