The war between Israel, the US, and Iran continues: the Strait of Hormuz is repeatedly closed and reopened, leaving stock markets confused. And the crypto market?
The war between the United States-Israel and Iran has entered its third month: the Strait of Hormuz, a fundamental chokepoint through which one-fifth of the world’s oil and LNG production passes, remains semi-blocked, even though Iranian and US delegations seem intent on reaching an agreement. Global stock markets, of course, have no idea what the future might hold but remain highly optimistic. The crypto market follows, but has been feeling the strain lately: what is the situation?
War in Iran: the timeline of the conflict
On the Italian morning of February 28, the United States and Israel officially launched a series of coordinated bombings against Iran: in less than 24 hours, they achieved one of the main goals of the raids, eliminating Ayatollah Ali Khamenei, supreme leader of the Islamic Republic of Iran. A few hours after the event, the Revolutionary Guards, one of the three Iranian armed corps, declared the Strait of Hormuz closed: “If anyone attempts to pass, the heroes of the Revolutionary Guards and the regular navy will set those ships on fire”.
In the days that followed, the traffic in the Strait was drastically reduced: media and international security organizations reported the presence of naval mines in the channel. The price of energy commodities, consequently, skyrocketed: through the Strait of Hormuz passes between 25% and 30% of global oil and LNG (liquefied natural gas) production. With the opening of the front, Brent—the international benchmark—skyrocketed and remained steadily above $100 a barrel.
The three subsequent months saw a continuous alternation between mutual threats and negotiations, but the warring parties have managed to find common ground: officially, as we write, the United States and the Islamic Republic of Iran have temporarily buried the hatchet.
In this regard, over the weekend of May 23-24, major international media spoke of steps forward toward a definitive end to the war: CNN, for example, reports that “the United States and Iran show signs of progress in efforts to end the conflict, but crucial details of a framework agreement are still being negotiated”.
Although the situation is not entirely clear, the aforementioned news has brought the price of Brent below $100 a barrel for the first time in more than a month.
The performance of major stock indices
When energy prices grow out of proportion, the real economy suffers: companies spend more to produce due to the across-the-board increase in costs, such as transportation and electricity in general. The result: the price hikes, in the end, are passed on to the consumer, who sees a generalized rise in prices, also known as inflation.
And markets know all too well that rising inflation increases the likelihood of an interest rate hike—the next FOMC meeting will take place in less than a month. What does all this mean in numbers?
Starting with the United States, the three main indices have returned well into positive territory: since day one of the conflict, the Dow Jones is gaining 3.4%, while the S&P 500 and the Nasdaq 100 have set new All-Time Highs and are gaining 8.6% and 18% respectively—the Dow Jones suffers more than the other two precisely because it is more exposed to energy price variations.
The turning point, i.e., the bottom followed by the trend reversal, occurred on March 30. Since that day’s close, the three indices have staged a significant recovery: the Dow Jones, S&P 500, and Nasdaq 100 are gaining 11.86%, 17.8%, and 30.4% respectively.
But let’s fly to Europe, which is faring slightly worse: the Eurostoxx 50 (STOXX), the index that includes the top 50 European companies, has returned to positive territory for the first time since the start of the conflict: currently, it is up 2% compared to the close on March 2. However, the situation is not bright for everyone: in detail, London is down 2.9%, Paris 1.8%, while Frankfurt and Milan, on the contrary, are gaining 2.5% and 8.15% respectively.
In Asia, the situation has turned more favorable: the Nikkei, which represents the 225 most important companies in Japan, updated its all-time highs and, since March 2, is marking a +13.6%, while the KOSPI, the main South Korean index which had lost up to 18% with the outbreak of the war, reversed its trend with an impressive performance: +35.5% since the close on March 3. In China, the Hang Seng travels in negative territory: -1.6% since Day One.
Focus precious metals: gold and silver
In this chaos, one would expect good behavior from precious metals, universally conceived as safe havens in times of strong turbulence. That is not quite the case.
The price of gold, since the start of the bombings, has dropped by 14.1%, closely followed by silver (-12.5%). At the same time, despite not being a precious metal, the dollar returns to assuming a store-of-value role: in these ten weeks, the DXY—the dollar vs six major foreign currencies—is gaining 1.15%.
And the crypto market?
The crypto market seems to be linked, with due proportion, to the performance of the US tech sector: since Friday, February 27, Bitcoin is gaining 17.8%, after weeks of high volatility in which it targeted $70,000 four times, finally managing to break that ceiling and launch an attack on $80,000; Ethereum is underperforming but still growing by 9.8%; Ripple and Solana, on the other hand, post more modest performances, rising by 0.5% and 5% respectively. In general, the Total Market Cap has grown by approximately 308.5 billion dollars (+13.7%).
Some interesting data
According to BitcoinTreasuries.net, over the past thirty days, Public Companies have increased their Bitcoin stakes by 2.2%. In other words, listed companies—such as Strategy (MSTR)—have brought the total held in Bitcoin to 1.24 million BTC. The opposite is true for ETFs and exchanges: recent outflows have reduced the amount of BTC held by 0.2% (total: 1.62 million BTC).
In this regard, it is interesting to compare the stakes of the most representative entities in these two categories: Strategy (MSTR) for Public Companies and IBIT for ETFs. It is an extremely close head-to-head: the former holds 843,738 BTC, the latter 804,921 BTC.
What lies ahead?
It is the big question that crypto (and non-crypto) investors have been trying to answer for days. Clearly, no one has the answer, because the future cannot be predicted. In these moments, the best thing to do is to study the fundamentals and understand how protocols work.
Don’t know where to start? Don’t worry: our Academy is excellent for those who want to start, but also for those who are already experts and want to review.
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