The impact of escalating tensions in the Middle East is reverberating through global markets, with cryptocurrencies feeling the brunt. Bitcoin experienced a 2.1% decline over the past 24 hours to $75,633 during Asian trading hours on Thursday, marking a 3% weekly decrease. This drop coincided with Brent crude oil prices surging 7.1% to $126.41 per barrel, reaching its highest intraday point in four years following an Axios report that President Donald Trump is slated to receive updates on new military strategies targeting Iran.
The report further disclosed a request by the U.S. Central Command for hypersonic missiles to be stationed in the Middle East, potentially marking their first combat use by American forces. This has effectively closed the Strait of Hormuz since late February’s outbreak, severely limiting crude and natural gas flows.
Such developments contribute to what is known as a ‘war premium,’ reflecting how conflict risk influences asset pricing beyond basic supply-demand dynamics. Throughout the year, Brent has carried this burden with a 100% increase in prices.
Brent continues its upward trajectory, enjoying a nine-day winning streak — its longest since May 2022 — and maintaining a year-to-date rise of over 100%.
Ether fell by 3.4% to $2,244, down 4.4% for the week, while XRP dropped 2.1% to $1.37, marking a 3.7% decline over seven days. Solana decreased by 2.6% to $82.62, and BNB fell 1.9% to $615. Among the top ten cryptocurrencies, only Dogecoin posted gains, rising 3.8% on Thursday and 10.1% for the week to reach $0.10.
Risk assets are retracting across sectors. Nasdaq 100 futures reversed a 1.1% gain driven by strong performances from Alphabet and Amazon, while MSCI’s Asia Pacific share index dropped by 1.4%, and European equities were set to decrease by 1% at the opening bell.
The dollar strengthened as bonds weakened due to increased oil prices and a hawkish Federal Reserve stance diminishing fixed income demand. Treasury yields for ten-year notes remained near their highest levels since July, with Japan’s equivalent hitting its highest since 1997, according to Bloomberg.
Bitcoin’s endurance amid the conflict is under scrutiny, maintaining a narrow range between $74,000 and $78,000 in April despite oil climbing from $98 to $126 as the conflict enters its third month. Each escalation has led to deeper drawdowns, with cumulative effects now evident. Currently, Bitcoin is $50,000 below its October 2021 peak of $126,000.
Fernando Lillo, director at exchange Zoomex, noted in a commentary that surpassing the $80,000 mark necessitates unwinding the war premium. “Bitcoin’s attempt to break through the crucial $80,000 threshold hinges on resolving the Middle East conflict and consequently reducing Brent crude prices below $100 per barrel,” he remarked. “These events are interdependent, with U.S. plans for a sustained naval blockade of Iran posing significant challenges.” Lillo suggested that if the Trump administration were to lift this blockade soon, presenting it as a response to ‘positive steps by Iran,’ it could spark a relief rally.
“A potential easing of regional restrictions and declining oil prices might prompt a swift influx of capital into risk assets, setting the stage for Bitcoin to solidify above $80,000 and potentially advance toward $85,000.”