The weeks-long war between Iran, the US and Israel has sent oil prices above $100 a barrel on both sides of the Atlantic, threatening to stoke inflation in the global economy. Asian markets are suffering, bond yields are rising, and yet Bitcoin It is barely hovering around $67,000, where it was 24 hours ago.
A possible reason? Bitcoin’s Strong Ties to Wall Street. Since the conflict began last week, US stocks have performed relatively well compared to Asian and European stocks, perhaps benefiting from America’s status as a net oil exporter. Bitcoin, which closely tracks US tech and Nasdaq moves, has captured the same resilience.
“The United States is not exposed to oil from Iran or the Middle East more broadly,” JPMorgan Executive Director Kriti Gupta and global investment strategist Justin Beiman said in a note to clients on Friday, noting the relative strength of U.S. stocks.
He pointed out that the US imports oil mostly from Canada and Mexico, and only 4% from Saudi Arabia, and it is now the world’s largest net oil exporter. This means the US has been largely spared from disruptions to the flow of oil through the Strait of Hormuz, while China and other Asian countries like India and South Korea are most affected.
Markets are pricing risk accordingly. Futures tied to the S&P 500 and the tech-heavy index Nasdaq have fallen more than 3% since the conflict began on Feb. 28. Meanwhile, Asian equity indices have taken a hit. Japan’s Nikkei and India’s Nifty have fallen 10% and 5% respectively. South Korea’s Kospi has fallen by more than 16%.
Although Bitcoin is a decentralized asset, it has gradually evolved into a quasi-American risk asset, moving increasingly closely with Wall Street, tech stocks, and even the US dollar. This trend has accelerated since the introduction of US spot ETFs, making it easier for institutional investors to access Bitcoin directly.
The election of Donald Trump in late 2024 also contributed to the shift, as markets reacted to his promises of looser regulations and a more crypto-friendly policy environment. Together, these developments have tied Bitcoin more closely to US financial conditions, making it less of a purely global, borderless asset and more of a barometer for US risk appetite.
This suggests that Bitcoin is increasingly tied to US financial conditions, making it less a completely global, borderless asset and more a barometer of Wall Street risk appetite.
Another factor helping Bitcoin is its oversold status. After weeks of profit-taking and wide market fluctuations, the cryptocurrency had fallen to around $60,000, long before the conflict began. That decline likely drove away short-term sellers, leading to a relatively stable base for the digital asset.
Inflation may appear with lag
Rising oil prices could burn a hole in the wallets of American consumers, even though the US is largely energy-independent.
“This doesn’t mean Americans are immune to higher gasoline prices,” said JPMorgan strategists Kriti Gupta and Justin Beiman. “Oil prices are still subject to global supply dynamics. But energy independence means there is a lag before prices rise, making it easier to withstand short-term volatility.”
In other words, prolonged conflict or continued oil increases could ultimately affect consumer prices. Still, for now, the US markets and Bitcoin appear to have recovered from the initial shock relatively safely.