- US President Donald Trump claims to have taken control of the Strait of Hormuz.
- Oil prices surged toward $85 following Donald Trump’s Strait of Hormuz ownership claims.
- Bitcoin’s price could surge or decline, depending on the dynamics of developments.
The ongoing war between the US and Iran has had prolonged global economic consequences. The direct effect on oil prices rippled across multiple sectors, with the cryptocurrency market taking a significant hit.
Bitcoin has struggled since the war began, with its price responding to the fluctuating narratives that dominated the period. Signs of potential peace in the region triggered a drop in oil prices, with consequential repercussions for Bitcoin’s price, and escalations triggered the opposite, with oil prices surging and Bitcoin moving in the opposite direction.
Trump’s Territorial Claim Over the Strait of Hormuz
In a recent turn of events, US President Donald Trump posted an image on social media claiming the Strait of Hormuz is now “New US Territory.” Oil prices have surged, moving toward $85 per barrel.
Trump’s post does not, in itself, establish that the Strait has actually become US territory. However, it raises a major question about what a further escalation around one of the world’s most important oil chokepoints would mean for energy prices, inflation, global liquidity, and Bitcoin.
The Significance of Trump’s Claims
It is crucial to note that Trump’s territorial claim over the Strait of Hormuz reflects an active combat posture. Experts believe it is a move that could choke off oil supply from the region by emphasizing the active blockade enforced by the US Navy. It increases regional tension, particularly after the recent threat from Trump’s cabinet targeting neutral parties like Oman.
The claim also emphasizes the stalled peace negotiations under the June Memorandum of Understanding, with Tehran maintaining that the strait will remain closed to commercial normalcy until the US lifts its oil embargo and restrictions on its frozen assets.
What Would Rising Oil Prices Mean for Bitcoin?
If the crisis escalates and oil prices climb above $85 to around $100, Bitcoin could experience downward pressure. This is because Bitcoin trades primarily as a high-beta liquidity sponge, and sudden escalations trigger brief capital flights into hard havens like gold or short-term Treasuries.
On the contrary, Bitcoin could behave differently, as seen before. Recent data shows Bitcoin stabilizing resiliently above $72,000 despite blockade headlines. This would happen if traditional fiat currencies suffer severe purchasing power degradation from an energy crisis. Hence, capital could rotate into BTC as an immutable, non-sovereign store of value.
How Would the Fed’s Response Affect Bitcoin?
Sustained higher oil prices act as a direct catalyst to revive inflation. If that becomes the case, the US Federal Reserve may delay or reduce rate cuts. That would eventually choke market liquidity, considering how high borrowing costs compress corporate earnings. The resulting situation could trigger capital migration out of speculative tech and crypto into defensive value sectors.
TradingView data reveals that Bitcoin traded at $64,775 at the time of writing, reflecting a 1.27% surge after an initial 0.63% decline earlier today. The cryptocurrency remains in a sideways channel, and experts believe it would take a notable catalyst to trigger a breakout.
Related: If the Strait of Hormuz Reopens, Will Bitcoin Actually Benefit?
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