Bitcoin has remained steady in the $66k-$67k range despite a sharp escalation in the Middle East conflict driving a broader global risk-off move across markets.
Energy markets have become the central transmission channel for the shock. Brent crude briefly approached $120 a barrel, marking one of the sharpest moves in years as the US-Israel war with Iran enters a second week and shipping through the Strait of Hormuz (the route for one-fifth of global oil flows) has effectively stalled. With producers in the Gulf curbing output and attacks targeting energy infrastructure, traders are increasingly pricing in the possibility of a prolonged supply disruption rather than a short-lived geopolitical flare-up.
The oil spike is reverberating across global markets. Asian equities fell more than 5%, volatility surged, and about $6 trillion has been wiped from global stock markets since the conflict began. Rather than acting as a haven, bond markets have also come under pressure as investors reassess the inflation outlook. Yields on US Treasuries and other sovereign debt have climbed as traders push back expectations for Federal Reserve rate cuts — with some now questioning whether the Fed will ease at all this year.
The concern is that the energy shock could push the global economy toward a stagflationary environment, where growth slows while inflation accelerates. Oil prices have risen roughly 80% since the war began, and economists warn that sustained increases in energy costs would both lift inflation and weaken economic growth. Markets are now bracing for the upcoming US CPI release, with traders expecting higher energy prices to feed directly into the next inflation print.
The move in commodities has also produced unusual cross-asset dynamics. Gold has declined despite the geopolitical turmoil, slipping toward $5,100 as a stronger US dollar and rising interest-rate expectations weigh on precious metals. In periods where inflation fears dominate, higher yields can offset gold’s traditional safe-haven appeal.
Within crypto, the reaction has been comparatively contained but still clearly tied to the broader macro environment. Bitcoin’s decline has been modest relative to some equity markets, suggesting leverage in the system has already been reduced after months of outflows. Still, institutional sentiment remains cautious, with nearly $6 billion withdrawn from US spot Bitcoin ETFs since November, highlighting that large allocators continue to trim exposure rather than step in aggressively during periods of volatility.
Away from crypto markets, stress is also emerging in parts of the financial system. Private credit funds are facing rising redemption pressure, with BlackRock recently capping withdrawals from one of its lending vehicles after investors attempted to pull nearly double the permitted quarterly limit. The episode highlights growing unease around liquidity in a $1.8 trillion industry built on loans that cannot easily be sold during periods of market stress.
Taken together, markets are now grappling with multiple overlapping pressures: a geopolitical conflict threatening energy supply, a renewed inflation shock, tightening financial conditions, and growing fragility across risk assets. Until there are credible signs of de-escalation in the Middle East or stabilisation in energy markets, volatility is likely to remain elevated — with oil prices, inflation expectations and the US dollar continuing to set the tone for global markets, crypto included.