Geopolitical tensions between the US and Iran pushed oil prices back up as of September 28; this movement is creating a chain reaction extending from inflation expectations to bond yields and, subsequently, the crypto market. I have compiled an overview for you regarding the impact of the geopolitical tensions that began in February on the markets, the current situation, and what to watch for in the coming days—specifically, how geopolitical tension gradually ripples through to the cryptocurrency markets.
Events began in February; since then, oil prices have risen with every escalation of tension and retreated with every positive diplomatic development. On the morning of September 28, Brent crude surged over 3% to reach the $107 level, triggered by US President Trump's rejection of Iran's proposal to reopen the Strait of Hormuz. Meanwhile, US crude traded around $95. The importance of the Strait of Hormuz is illustrated by a simple figure: prior to the conflict, approximately one-fifth of the world's oil passed through this narrow waterway. Consequently, any negative news concerning the strait rapidly drives up prices due to fears of supply disruptions. Brent crude has gained approximately 18% in the last month and 59% compared to the same period last year. Goldman Sachs analysts warn of the risk that prices could climb above $120 if attacks on vessels intensify.
On September 16, the US Federal Reserve (Fed) raised its policy interest rate to the 3.75%–4% range, marking its first rate hike in over three years. This decision was interpreted as being primarily driven by inflationary pressures stemming from oil and energy costs. In August, US consumer prices rose by 0.4% month-on-month—marking the largest increase in four months—while annual inflation climbed to 3.4%. The price of diesel, a key fuel for logistics, hit a record high, surpassing $6 per gallon. Fed Governor Kevin Warsh emphasized that inflation had remained too high for too long. According to many analyses, markets are pricing in the expectation that the interest rate hike will not be a one-off event. A vast majority of Fed members anticipate another hike before the end of the year; following strong economic data, the probability of a 25-basis-point increase at the October meeting has risen to approximately 71%.
On September 24, the yield on the 10-year US Treasury note climbed to 5.18%, reaching its highest level since 2007. Just one day prior to the onset of geopolitical tensions, the yield stood at 3.96%. Recently, bond yields and oil prices have been moving in near-lockstep. According to calculations by BMO Capital Markets, the one-month correlation between US oil prices and the 10-year Treasury yield has reached 0.96. The logic is straightforward: as oil prices rise, so do inflation expectations; as inflation expectations rise, so does the yield investors demand from bonds. However, attributing the rise in interest rates solely to the war would be incomplete. The sharp increase on September 23 was also driven by better-than-expected manufacturing data, hawkish statements from the Fed, and a 5-year Treasury auction that saw weak demand. The sell-off was not limited to the US; Interest rates have also risen in the UK, Germany, and Japan. The impact of this rise on daily life is tangible: in the US, the interest rate on 30-year fixed-rate mortgages climbed to 7.37%, reaching its highest level since May 2024. On September 28, the yield on 5-year bonds also rose to 5.06%.
As for Bitcoin, it fell by approximately 2% over a 24-hour period on September 28, dropping to around $82,600. Ethereum and XRP lost between 2% and 4% of their value, while Solana fell by more than 4%. Analysts do not attribute this pullback to a single cause. Bitcoin had surged by nearly $10,000 over four days the previous week; profit-taking and forced position closures (liquidations) exceeding $500 million coincided with high bond yields and expensive oil. Rising interest rates make risky, non-yielding assets less attractive to investors. There is, however, a more positive side to the picture. Spot Bitcoin ETFs in the US recorded net inflows of $2.39 billion during the week of September 21–25. Bitcoin remains well above the lows in the $75,000–$77,000 range seen in mid-September. The technical levels monitored by market participants are as follows:
$83,000: near-term support zone
$86,000–$87,000: resistance zone tested last week
Any negative news regarding the Strait of Hormuz impacts the crypto market through a four-step chain reaction: oil prices rise, inflation expectations increase, interest rates go up, and investors move away from risk assets. This dynamic works in both directions; when Iran’s proposal to open the strait surfaced on September 22, oil prices fell sharply, while Bitcoin climbed above $87,000. Consequently, the crypto market has been more sensitive than ever to geopolitical headlines and oil prices in recent weeks.
