A collapsed ceasefire, fresh airstrikes, and a crude market that appeared unprepared for another geopolitical shock have altered the mood across financial markets this week. Oil has moved back to the center of the risk conversation, with the latest flare-up between the United States and Iran sending Brent crude higher by about 6%.
Bitcoin, still nursing wounds from a brutal June, finds itself caught in the crossfire and has reacted with a 3% correction in the past 24 hours.
The Strait Of Hormuz Rekindles A Global Energy Scare
Brent crude oil prices surged 6% to an intraday high of $78 a barrel on Wednesday as tensions in the Middle East increased concerns over further supply disruptions. The US revoked a waiver that had allowed Iran to sell crude, following attacks on vessels transiting the Strait of Hormuz, while Tehran said it had targeted more than 80 US military sites in Bahrain and Kuwait in response to what it called American violations of the existing ceasefire.
President Trump declared the Iran ceasefire over, a reversal that caught markets off guard after weeks of relative calm. Wall Street felt the shock immediately, and the Dow futures dropped 700 points.
Brent had actually fallen to $72 in early July, with prices down more than 38% from their April peak around $118 due to hopes that the US-Iran memorandum would help restore flows through the Gulf. However, that progress now looks fragile.
Crypto Feeling The Squeeze
The risk-off reflex has been immediate and consistent across digital assets. Bitcoin opened at $63,318 on Wednesday before falling to as low as $61,500 by mid-morning, while Ethereum fell from an open near $1,769 to about $1,742 at the time of writing.
The backdrop was already shaky before the latest tensions in the Middle East. Bitcoin had printed a 21-month low of $57,740 on July 1 amid rate hike fears, leaving it with a limited cushion to absorb another macro shock. Compounding the pressure, the stablecoin market dropped by 2.4%, or $7.7 billion, in June to $312 billion, its most significant monthly decline since the 2022 TerraUSD collapse.
On the other hand, US bond yields rose to four-week highs alongside European bonds following the collapse of the ceasefire, and while equities managed a partial bounce, crypto saw no such afternoon buying, with Bitcoin still trading near its daily low.
Crypto investors should therefore watch three things from here: whether Brent can hold near the upper end of the $70 range, whether bond yields continue rising, and whether Bitcoin can defend its current price zone above $60,000.