From "Peace Premium" to "War Premium": How the Escalation of the U.S.-Iran Conflict Reshapes the Pricing Logic of Bitcoin, Oil, and Gold?

Geopolitical conflicts were supposed to be gold’s “big moment.” With war clouds looming, safe-haven capital was expected to rush into precious metals, and gold prices should have risen on cue—an almost deeply ingrained truism in financial markets. Yet the market performance on July 9, 2026 is overturning this conventional wisdom.

As of Beijing time on July 9, spot gold was trading at approximately $4,070 per ounce, recording losses for the fourth consecutive trading day. COMEX gold futures fell 1.7% to close at $4,086.6 per ounce. Meanwhile, the military conflict between the United States and Iran suddenly escalated: the U.S. military launched a new round of airstrikes on about 90 targets inside Iran, while Iran’s Revolutionary Guard carried out retaliatory strikes against U.S. military bases in Bahrain and Kuwait. U.S. President Trump publicly declared that the U.S.-Iran memorandum of understanding “has ended,” and warned that more strikes may follow.

Gold fell instead of rising. Bitcoin also failed to break out of an independent trend. As of Beijing time on July 9, Bitcoin was at $62,512.1, down 0.12% over 24 hours. However, its cumulative decline over the past 7 days has reached 7.63%, and over the past 30 days it is down 10.73%—this price is down 33.74% from the $126,193.0 peak in July 2025. Ethereum was at $1,730, down 1.2% on the day. The Fear and Greed Index slipped from 28 to the 20–23 range, placing it in an “extreme fear” state.

In sharp contrast to the weakness in gold and Bitcoin, international oil prices are undergoing a fierce rally. WTI crude oil futures closed at $73.52 per barrel, up 4.37% on the day; Brent crude oil futures were at $78.02 per barrel, surging as much as 5.2%, and at one point during the session briefly broke through the $80 level.

The “war premium” did not flow into gold and Bitcoin—it was absorbed entirely by the crude oil market. Through a hidden yet clear transmission chain, it has been transformed into dual pressure on both non-yielding assets and risk assets.

The Strait of Hormuz: The world’s “energy throat” and the “switch” for inflation

To understand the underlying logic behind this market disruption, we must first go back to the source of the conflict—the Strait of Hormuz.

This narrow waterway between Oman and Iran is the world’s most important oil transportation route. About 30% of global seaborne oil trade passes through it, and any disruption to passage means an immediate shock to global energy supply. Since July, this crucial choke point has been facing the most severe threat since the outbreak of the U.S.-Iran war.

The trigger began when three merchant ships in the Strait of Hormuz were hit by unidentified missiles. The U.S. Central Command then announced strikes against more than 80 targets inside Iran, including air defense systems, command-and-control networks, coastal radar positions, anti-ship missile facilities, and more than 60 small fast boats of Iran’s Revolutionary Guard in and around the Strait of Hormuz. The U.S. military said the objective was to “degrade Iran’s ability to continue attacking commercial shipping on international trade routes.” After that, the conflict continued to escalate: the U.S. military launched another round of strikes, with the target list expanded to approximately 90 Iranian military facilities.

Iran’s response was equally tough. Iran’s chief negotiator, Kalibaf, stated clearly: “The Strait of Hormuz will only reopen at Iran’s arrangement, not through U.S. threats.” Iran’s Revolutionary Guard has launched missile and drone attacks against four U.S. bases in Bahrain and Kuwait.

Oil tanker transit through the Strait of Hormuz has “basically stopped.” This reality directly shows up in oil prices—after the escalation of the conflict, Brent crude returned above $80, and WTI crude recorded its biggest single-day gain in five weeks.

A rise in oil prices is never just a rise in oil prices. As the most basic means of production and a source of transportation costs in the modern economy, every jump in crude oil prices is transmitted step by step along the chain of “energy costs → production costs → terminal prices,” ultimately appearing in price indices of every economy in the form of inflation. And once inflation expectations start heating up, central banks’ monetary policy is inevitably pushed to the other side of the scale.

Inflation expectations heat up: How the shadow of rate hikes returns to the market

Between a surge in oil prices and inflation expectations, there is an already well-validated transmission path.

According to data from the American Automobile Association, before the U.S.-Iran war broke out, the average U.S. gasoline price was below $3 per gallon; by May it had skyrocketed to a peak above $4.56. Now that the conflict has escalated again, upward pressure on energy prices is being transmitted once more to consumer end products.

The minutes of the Federal Reserve’s June meeting were released at Beijing time on July 9, further reinforcing the market’s hawkish expectations. The minutes show that Fed officials generally believe that if inflation remains at a high level this year, further rate hikes will be needed. Some committee members felt there was already a reason to raise rates last month, and officials’ forecasts for the future economic trajectory were split into two camps of roughly equal strength. The minutes specifically mentioned that the Middle East conflict and tariff policy are two major inflation risks.

More notably, concerns within the Federal Reserve about “AI inflation” are heating up quickly. In the April meeting minutes, “AI” was mentioned only 8 times, and only 1 of those mentions was related to inflation; in the June minutes, “AI” appeared 20 times, with 7 directly linked to upside inflation risks. The minutes warned that the frenzy of AI infrastructure investment, alongside tariffs and oil prices, is among the three major inflation threats facing the Federal Reserve. This signal suggests that inflation pressure is not solely a short-term disruption caused by geopolitical conflict, but is forming a structural situation shaped by multiple overlapping factors.

The market is rapidly digesting these signals. Based on CME data from “FedWatch,” the probability that the Federal Reserve will keep rates unchanged in July is 69%, while the probability of cumulative 25 basis points of hikes has risen to 31%; by September, the probability of cumulative 25 basis points of hikes reaches 51.9%, and the probability of cumulative 50 basis points of hikes is 17%. The money market has pulled forward expectations for the Federal Reserve’s next rate hike from December to October. Global government bond markets have been hit by heavy selling: two-year U.S. Treasury yields are nearing the 2026 highs, and ten-year U.S. Treasury yields briefly broke above the 4.6% mark.

Veteran Wall Street analyst Ed Yardeni, president of Yardeni Research, said bluntly: “Inflation concerns are back, and the Federal Reserve is therefore returning to the center of market attention. Not only has the Federal Reserve turned tighter, it may actually have to tighten.”

The logic behind gold under pressure: the “interest rate curse” of non-yielding assets

At this point, the full chain of logic behind gold’s decline has come into view.

Gold is a non-yielding asset, and its holding cost is directly determined by real interest rates. When inflation expectations heat up and the market starts to price in rate hikes, real interest rates move higher—so the opportunity cost of holding gold rises, and capital naturally flows from gold to assets that can generate interest income. This is the core mechanism behind gold’s “abnormal” drop during this geopolitical conflict.

Spot gold touched its lowest level since July 1 on Wednesday at $4,021.70 per ounce. It then rebounded slightly to around $4,070, but has still recorded declines for four consecutive trading days. Spot silver fell to $58 per ounce intraday. COMEX gold futures closed down 1.7%, and silver futures closed down 4.3%.

An increase in interest rates is the main factor driving gold’s decline. As a non-yielding asset, when cash interest rates rise, gold’s appeal weakens. This is not the failure of gold’s safe-haven properties; rather, it is a higher-level macro force—monetary policy expectations—overwhelming the short-term impact of geopolitics.

Bitcoin’s new pricing paradigm: from “digital gold” to “interest rate mirroring”

Bitcoin’s situation is even more complex—it faces pressure from two directions at once.

On one hand, as a risk asset, Bitcoin is highly correlated with global liquidity and risk appetite. When expectations for rate hikes rise and expectations for liquidity tighten, risk assets are naturally under pressure. Bitcoin’s performance—down 7.63% over the past 7 days and down 10.73% over the past 30 days—is a direct reflection of this logic. On the other hand, for a long time, some investors have regarded Bitcoin as “digital gold” and a hedge against inflation. If that narrative holds, inflation concerns triggered by geopolitical conflict should have lifted Bitcoin’s price—but the reality is the opposite.

Behind this is a structural shift in Bitcoin’s pricing logic.

Looking back at several geopolitical events in 2026, Bitcoin’s response patterns show clear inconsistency: in February, when the U.S. and Israel carried out airstrikes on Iran, gold rose while Bitcoin fell; in May, during the back-and-forth of U.S.-Iran negotiations, Bitcoin largely tracked U.S. stocks; and this time, when the U.S. military directly launched a large-scale strike, Bitcoin again failed to show an independent trend. An increasingly clear trend is that Bitcoin’s pricing power is shifting from “geopolitics” to “U.S. dollar liquidity.”

The market is increasingly treating war-related shocks as interest rate events rather than as events unique to crypto. Bitcoin now tracks short-term Treasury yields more tightly than traditional hedges like crude oil or gold. This means that when the market reprices the expected rate path due to the oil price surge, Bitcoin bears systemic pressure from the interest-rate side instead of receiving a geopolitical risk premium.

A CoinDesk analysis provides a key framework for observation: if Bitcoin does not fall below $60,000 amid further escalation at the Strait of Hormuz, while gold continues to slide, then the trend of capital exiting traditional hedges is real—Bitcoin is being repriced as an interest-rate asset rather than a risk asset. As of July 9, Bitcoin is consolidating around $62,000, and its intraday trading range has narrowed to $61,800–$62,100—the key psychological level of $60,000 is being tested.

Conclusion: the endpoint of the transmission chain

From the gunfire at the Strait of Hormuz to the price boards at gas stations, and finally to the Federal Reserve meeting room—ending at the trading terminals of gold and Bitcoin—every link in this transmission chain was fully validated on July 9.

Strait of Hormuz blocked → crude oil supply shock → oil price surge → inflation expectations heat up → rate hike expectations strengthen → pressure on non-yielding assets (gold) and risk assets (Bitcoin).

This is not a chain that requires complicated assumptions to infer—it has already been fully confirmed by market price movements over the past few days. WTI crude rose more than 4% in a single day, and Brent crude rose more than 5%. Gold fell for four consecutive days, breaking below $4,100. Bitcoin fell more than 7% over seven days, and market sentiment sank to “extreme fear.” These three seemingly contradictory market phenomena are, in fact, synchronized reflections of the same transmission chain across different asset classes.

For participants in the crypto market, this framework offers an analytical path that is more explanatory than “war is bullish for Bitcoin” or “safe-haven capital inflows.” In the backdrop of escalating geopolitical conflict, what may truly matter is not where the next missile lands, but by how many percentage points the probability of a Federal Reserve rate hike will rise when the next inflation data is released.

FAQ

Q: Geopolitical conflict traditionally benefits gold. Why did gold fall this time?

The core logic behind this gold drop is “oil price surge → inflation expectations heat up → rate hike expectations strengthen → pressure on non-yielding assets.” As a non-yielding asset, gold’s holding cost increases as real interest rates rise. When the market starts betting on Federal Reserve rate hikes, capital flows out of gold, and the safe-haven effect of geopolitics is overridden by the pressure from macro monetary policy.

Q: Has Bitcoin’s safe-haven property already failed?

Bitcoin’s safe-haven narrative is undergoing structural adjustment. Multiple geopolitical events in 2026 show that Bitcoin’s pricing logic has shifted from a “geopolitical barometer” to a “U.S. dollar liquidity mirror.” The market is treating war shocks as interest rate events, so Bitcoin is tracking U.S. bond yields more closely rather than oil prices. But this does not mean Bitcoin’s “digital gold” narrative has been completely dismantled—rather, its pricing mechanism is becoming more mature and complex.

Q: How much impact does the Strait of Hormuz conflict have on global inflation?

About 30% of global seaborne oil trade passes through the Strait of Hormuz. Currently, tanker passage through the strait has “basically stopped,” directly pushing up international oil prices—WTI is up more than 4% on the day, while Brent is up more than 5%. Oil price increases raise inflation through both direct channels (energy’s weight in the consumption basket) and indirect channels (production costs transmitted to industrial goods and end consumption). The Federal Reserve’s June meeting minutes have listed the Middle East conflict as one of the three major inflation risks.

Q: How likely is it that the Federal Reserve will raise rates in 2026?

As of July 9, CME data from “FedWatch” shows the market expects a 51.9% probability of cumulative 25 basis points of hikes by September, and a 17% probability of cumulative 50 basis points of hikes. The money market has pulled forward expectations for the first rate hike from December to October. The Federal Reserve’s June meeting minutes show that among 19 officials, 9 believe at least one rate hike will be needed this year. The key variables for the probability of rate hikes remain oil price trends and inflation data.

Q: Why is the $60,000 level so critical for Bitcoin?

$60,000 is currently the most important technical and psychological support level for Bitcoin. CoinDesk analysis notes that if Bitcoin does not fall below $60,000 despite further escalation at the Strait of Hormuz, it indicates the market is repricing Bitcoin as an interest-rate asset rather than a risk asset. If it breaks below that level, it would mean that the previously resilient performance may have been due to thin market activity rather than a structural change. This level will determine the directional choice for Bitcoin’s medium-term trend.