"The IEA releasing reserves is a band-aid," Jonathan Farnell, CEO of Freedx, told Decrypt. "As long as the conflict continues, the supply disruption premium isn't going anywhere."
The Strait of Hormuz—which carries roughly 20% of the world's daily oil supply—is functionally paralyzed, with major shippers rerouting around Africa, Farnell said. The disruption raises the risk of persistent inflation and delays expectations of monetary easing, tightening financial conditions across asset classes.
The U.S. dollar index continues to hover just below $100 despite geopolitical uncertainty.
Despite the broader risk-off environment, Bitcoin has outperformed gold and the Nasdaq-100 index since the war began on February 28. The leading crypto is up over 8%, while the precious metal and the U.S. stock market index are down 2% and 0.5%, respectively.
While Bitcoin initially trades like a risk asset during periods of liquidity tightening, sustained geopolitical instability can reinforce structural demand for censorship-resistant financial assets, Rachel Lin, CEO of SynFutures, told Decrypt.
"The first-order effect is risk-off volatility, but the second-order effect can be renewed structural demand," Lin added.
With oil above $100, the prospect of a near-term Federal Reserve pivot appears increasingly remote, according to Farnell, keeping Bitcoin's path of least resistance sideways to down through the end of March.
The contrarian case, he added, is that prolonged conflict requires government debt issuance, which eventually expands liquidity and weakens the dollar—historically favorable conditions for Bitcoin, but a dynamic more likely to materialize in the second half of the year.
