Iran-US Escalation: Bitcoin Drops to $62,600, Oil Jumps 4%

Bitcoin fell to $62,600, losing nearly 2% in 24 hours, as the resumption of fighting between the United States and Iran drives investors away from risky assets. Brent crude surged nearly 4% to a four-week high, reviving the specter of persistent inflation and US monetary tightening. This escalation comes after a period of relative calm that had allowed bitcoin to partially recover from its late June lows. The rise in oil, by increasing production and transportation costs, directly fuels inflation expectations, which impacts bond markets and, by extension, digital assets.

Strait of Hormuz Remains Closed for 136 Days

Attacks on oil tankers have reduced traffic in the Strait of Hormuz, which carried about a fifth of the world's oil and gas supply before the conflict. The strait has been de facto closed for 136 days, and bets on a reopening before the end of the year have fallen from 65% to 56%, according to prediction markets. The probability of a reopening by the end of the month is considered nearly zero. This situation revives the "Nacho trade" (Not a Chance Hormuz Opens), a speculative strategy that bets on the continued closure of the strait and soaring oil prices. New Iranian ballistic missile attacks on a US base have further increased tensions, making any short-term de-escalation scenario highly unlikely. The Strait of Hormuz is a strategic passage for about 20% of the world's oil and gas; its prolonged closure disrupts entire energy supply chains and exerts upward pressure on crude prices.

Two-Year Yields Rise to 4.28%, Fed Under Pressure

The rise in oil fuels inflation fears, pushing the two-year Treasury yield to 4.28%, a level that weighs on bitcoin and gold. Prediction markets now assign a 36% probability to a Fed rate hike as early as July. The CoinDesk 20 index lost 0.6% over the period, while European stock indices fell about 1% and US futures dropped 0.3%. Rising bond yields reduce the appeal of non-yielding assets like bitcoin and gold, as they increase the opportunity cost of holding them. Moreover, anticipated monetary tightening strengthens the dollar, which puts additional pressure on dollar-denominated cryptocurrencies. The mechanism is as follows: when investors anticipate a rate hike, they sell long-dated bonds, pushing yields higher; these higher yields attract capital to traditional assets, to the detriment of speculative assets. The Fed, faced with persistent inflation, may be forced to act sooner than expected, especially if oil prices continue to rise.

June CPI Inflation: Decisive Test for Markets

The release of the June CPI index, expected this Tuesday, is the next major catalyst. The consensus expects a slowdown in headline inflation to 3.8% year-over-year, from 4.2% the previous month, while core inflation is expected to remain stable at 2.9%. A lower-than-expected figure could reduce bets on a July rate hike, while a higher-than-expected figure would strengthen them. The CPI is the Fed's most closely watched inflation indicator; an upside surprise would confirm that price increases are stubborn, justifying monetary tightening. Conversely, a marked slowdown could ease fears and allow a temporary rebound in risky assets. Markets are therefore in suspense, and volatility is expected to remain high until the data is released.