The asset linkage logic under the background of US-Iran conflict must be re-examined

When news breaks that the US and Iran clashed in the Strait of Hormuz, a fascinating phenomenon appears: US stocks fall, Bitcoin drops, oil prices rise, and US bond yields hesitate. This combination of asset movements is not accidental; behind it lies a clear chain of logic that every market participant should carefully analyze.

The chain is as follows—
Step 1: Geopolitical conflict escalation pushes up oil prices.
Step 2: Rising oil prices transmit through production and transportation costs to consumer goods prices, putting upward pressure on inflation.
Step 3: Inflation remains stubbornly high, causing the Federal Reserve’s rate cut timetable to be pushed back, and possibly reigniting discussions of rate hikes.
Step 4: The prolonged high-interest-rate environment puts pressure on risk assets (especially previously soaring tech stocks and cryptocurrencies), leading to valuation declines, as funds shift to defensive assets.

The key variable in this chain is the magnitude and duration of the oil price increase. If it’s just a short-term pulse, the impacts on steps three and four will be absorbed by the market; but if oil prices stay high for an extended period, the entire macro environment will shift in the medium term, and not only Bitcoin but global stock markets will face a serious re-pricing.

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Additionally, there is a less obvious linkage path: if the US-Iran conflict truly affects oil transportation, some oil-producing countries might use sovereign funds to redeem overseas assets to cope with their fiscal pressures. Such redemptions often involve selling off US stocks and US bonds, indirectly causing a liquidity drain globally.

If tonight’s non-farm payroll data happens to be stronger than expected, it adds another weight to the third step in the chain above, turning risk assets’ outlook from a single negative factor into a combined punch. Understanding this entire linkage allows you to react faster than others, rather than only realizing the pattern after the market has moved.