The US military is now on its fourth consecutive night of strikes against Iranian targets, and Iran has retaliated by attacking American military bases across five Gulf states. The Strait of Hormuz — through which 20% of the world’s oil flows daily — is effectively contested. Brent crude surged to 8.14. WTI hit 3.24.
The Oil-Crypto Connection
Oil at 8 changes the macro calculus for crypto in several important ways. Higher energy prices feed into inflation expectations, which influence central bank policy. Fed Governor Waller explicitly cited energy prices as a concern in his hawkish Monday speech. For Bitcoin, higher-for-longer rates mean higher opportunity costs and reduced institutional appetite for risk assets.
But there’s a contrarian argument. Geopolitical crises that undermine confidence in the traditional financial system tend to benefit decentralized assets over time. The Iran conflict demonstrates the fragility of dollar-based trade settlement. Bitcoin’s ‘don’t trust, verify’ ethos becomes more attractive when trust in the global order is strained.
Historical Precedent
During Russia’s 2022 invasion of Ukraine, Bitcoin initially sold off alongside risk assets but recovered strongly within weeks. A similar pattern could play out here — short-term pain from risk-off selling, followed by medium-term gains from institutional investors seeking portfolio diversification.