Crypto Traders on Tenterhooks as Oil Prices Signal Risks

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(Bloomberg) — With 24/7 crypto markets having already digested US-Iran tensions over the weekend, digital-asset traders are on the defensive as they assess potential contagion risks from crude oil prices when US markets open on Monday.

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Bitcoin and other cryptocurrencies already took a hit on Saturday after the US announced it had begun a bombing campaign against Iran. A cautious rebound followed news that Ayatollah Ali Khamenei had been killed, but prices remained little changed from Friday’s levels. The original cryptocurrency was up roughly 1.3% to about $66,500 as of 11:20 a.m. in Singapore on Monday.

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Traditional markets in Asia, meanwhile, offered a preview of what might be expected throughout the day as investors react to the latest news of conflict in the Middle East. Benchmarks including Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index fell, while oil saw its largest price surge in four years.

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“The focus is mainly on oil this morning, with all eyes on the developing Strait of Hormuz situation,” said Caroline Mauron, co-founder of Orbit Markets, referring to disruptions to trade through the critical Gulf waterway. “Crypto is a sideshow for now and will remain so as long as it stays in the $60,000 to $70,000 range of the past few weeks.”

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Higher oil prices would likely weigh on cryptocurrency prices, which are sensitive to expectations for US Federal Reserve policy. Inflation driven by higher energy costs could push back expectations for the next rate cut, hurting risk assets. Crypto has tended to trade more in line with equities than haven assets such as gold.

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Haven assets have surged in the wake of the bombings. Yields on 10-year Treasuries fell to the lowest level since October 2024, while gold rose 1.4% to about $5,350 an ounce Monday morning.

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The US dollar strengthened the most among its Group-of-10 currency peers, climbing in early Asia trading amid expectations it will remain an effective hedge against higher energy prices.

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In the crypto world, tokenized assets had already priced in the Middle East conflict for oil, gold and silver. Perpetual swap futures — contracts without an expiration date — linked to those commodities were up over the weekend on Hyperliquid, a 24/7 trading venue. 

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Contracts for gold rose 1.36% to $5,354.10 an ounce Monday morning, while those for oil and silver edged downward. 

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“Since the escalation in Iran, crypto has clearly taken a back seat to traditional geopolitical hedges,” said Charlie Sherry, head of finance at BTC Markets. “In periods of geopolitical stress, capital rotates into hard assets, not into high-beta risk proxies.”

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That caution can be seen in the Bitcoin options market, where roughly $1.9 billion of puts are concentrated at the $60,000 strike price on Deribit, signaling persistent demand for downside protection.

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However, the absence of follow-through selling is notable, according to Sherry.

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“When markets stop going down on bad news, it can signal seller exhaustion and the potential for a short-term bottom,” he said. “That is not confirmation of a trend reversal, but it is a condition to monitor.”

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