- Experts warned that an Iranian blockade of the Strait of Hormuz could trigger a global risk-off move.
- The Options market showed a premium for puts, underscoring short-term bearish sentiment and hedging.
Bitcoin [BTC] pumped to $108K on the 16th of June following traders’ bullish positioning despite the Israel-Iran escalation over the weekend. However, BTC dropped to $105K as the war premium faded.
Reacting to the market volatility, Tracy Jinn, COO at MEXC crypto exchange, told AMBCrypto that there was only one key risk factor in the war.
“There’s still one big risk to watch out for: the Strait of Hormuz. About 20% of the world’s oil (20 million barrels) goes through this narrow stretch of land, and any kind of conflict could lead to a sharp rise in energy prices.”
Markets on edge
Jin added that such a scenario would drive inflation higher by the end of the year, triggering a risk-off move and denting crypto and equity markets.
“As crypto trades become more and more linked to macro assets, Bitcoin, which is often seen as ‘macro beta’ these days, is likely to see some fresh volatility.”
There were speculations that the U.S. may join the war, but lawmaker Thomas Massie maintained that they can’t go to war without a congressional approval.
In addition, prediction site Polymarket showed only a 2% chance of the U.S. declaring war on Iran before July.
On a Monday market update, crypto trading firm QCP Capital echoed Jin’s sentiment and warned that a U.S. involvement would lead to ‘repricing across risk assets.’
“A potential Iranian blockade of the Strait of Hormuz could drive oil sharply higher. Any direct US military involvement would likely result in significant repricing across risk assets.”
At press time, there was increased defensive BTC market positioning as 25 Delta Risk Reversal (25RR) flipped negative.
It meant short-term bearish sentiment and increased demand for puts (bearish bets) over calls (bullish bets). Simply put, traders were heavily hedging against further downside risk.
That said, BTC ETFs saw $412 million inflows on the 16th of June, which reinforced institutional conviction. Whether the positive inflows will continue throughout the week remains to be seen.
But Jin highlighted that BTC could hit $150K by Q4, if the ETF inflows remain positive in the medium term. In the short term, though, the king coin may be under the whims of liquidation hunt, noted analyst Will Woo.
If so, the next price magnet could be the $100K-$103K area before a likely sweep to $108K-$110K price zone. The upside liquidity hunt could happen if any positive deal is reached between Iran and Israel.
Source: CoinGlass
