Key Takeaways:
Bitcoin showed no safe-haven bid during the Strait of Hormuz crisis, then sold off with Asian technology stocks — revealing its risk-on character.
Bitcoin held flat as Brent crude surged past $90 on US strikes in Iran, then fell with Asian chip stocks later in the week.
"Prices are too high," Kevin Warsh, chair of the Federal Reserve, said at a central-bank forum in Portugal on July 1, as the central bank held rates steady in June.
Brent crude climbed more than 3% on Monday to near $91.40, capping a 14% jump the prior week, according to Trading Economics data. Oil has rebounded nearly 30% from its early-July low near $71 after President Donald Trump ended a June 17 truce on July 8. The Strait of Hormuz carries about a fifth of the world's oil, and traffic is now thin after Iran said the waterway is closed to unauthorized ships.
The Fed now faces a difficult calculation. US prices fell 0.4% in June, the biggest monthly drop since April 2020, because energy got 5.7% cheaper, Bureau of Labor Statistics data show. Oil at $90 runs that math in reverse. Hike odds for the July 28-29 meeting doubled to 36% from 18% in early July, per CME FedWatch data. Higher rates hurt risk assets, and Bitcoin is struggling to hold its recovery, with sellers fading every bounce.
Why Bitcoin Didn't Rally on War
Bitcoin's flat performance through the missile strikes challenges the narrative that the largest cryptocurrency serves as a geopolitical hedge. A BeInCrypto study of the conflict's first phase, from February 28 to June 17, found that stocks beat BTC as the strongest war hedge. The pattern repeated in July: Bitcoin showed no bid as the US launched an eighth consecutive night of strikes, hitting targets in Bandar Abbas and Qeshm Island.
Instead, Bitcoin moved with risk assets. When Asian semiconductor stocks sold off later in the week, BTC declined in tandem — reinforcing its correlation with technology equities rather than gold or other traditional havens.
The 10-year Treasury yield sits near 4.55%, close to a two-month high, as bonds fell alongside the oil surge. Higher yields raise the opportunity cost of holding non-yielding assets like Bitcoin, adding further pressure. The DXY dollar index, another headwind for risk assets, has also strengthened as the conflict drives capital toward safe-haven currencies.
What to Watch
All eyes turn to July 28 and 29. If oil holds above $90, a Fed hike could move from tail risk to base case, per CME FedWatch data. The probability of WTI crude reaching $90 by the end of July is priced at 46% YES in prediction markets, reflecting expectations of sustained supply disruption through the Strait of Hormuz.
A ceasefire proposal from Qatar and Pakistan — a 10-day cessation of strikes — could ease oil prices and reduce Fed hike pressure if accepted. Mediators are actively contacting officials from both sides, though sporadic ceasefire violations have continued and both parties disagree on what the terms actually mean. For Bitcoin, the path depends on whether the Strait of Hormuz crisis resolves or escalates in the days ahead.
This article is for informational purposes only and does not constitute investment advice.
