U.S.-Iran Continued Clashes, Strait of Hormuz Blockade: How Geopolitical Risk Could Ignite the Crypto Market?

The latest U.S.-Iran conflict began on July 7, 2026. The core trigger was an attack on merchant ships in the Strait of Hormuz that sparked a military standoff between both sides. As of July 23, the U.S. military has launched military strikes against Iran for 12 consecutive nights. Data from the U.S. Central Command shows that since the 7th, the U.S. has struck a total of about 170 targets against Iran. The strike range has expanded from Iran’s coastal military and port facilities to civilian facilities in the central, eastern, and northern regions, including ports, airports, train stations, facilities near nuclear power plants, and petrochemical plants.

Iran, meanwhile, has launched attacks on U.S. military bases and military facilities within the borders of countries such as Syria, Jordan, Iraq, Qatar, Bahrain, Kuwait, and Oman, and it has also targeted Kuwait’s seawater desalination plant and power generation facilities. On July 20, Iranian President Pezeșkian publicly announced that Iran is in a “full-scale war” state. At the same time, Yemen’s Houthi forces announced a maritime navigation ban on Saudi Arabia, opening a second front toward the Red Sea. The U.S.-Iran memorandum of understanding signed in June has been recognized by both sides as a matter of de facto death. Although mediators such as Qatar, Egypt, and Pakistan have proposed a 10-day ceasefire, there has been no clear progress as of July 23.

Strait of Hormuz Transit Volume Plunges by 77-90%: What Reality Do the Data Reveal?

Strait of Hormuz navigation data clearly reflect the intensity of the shock caused by the escalation of the conflict. On July 7, the strait recorded 51 transits, and the number of vessels departing the Persian Gulf temporarily surged to 35. But during the night of July 8 to the early hours of July 9, transit volume crashed to just 5 times. On July 9, the number of vessels passing through the strait area further fell to 22. During the week from July 13 to 19, tanker transits collapsed from 85 times in the previous week to 39. In particular, non-Iran-linked tanker transits fell from 53 to 17. Lloyd’s List data shows that from July 13 to 19, the number of transits of non-Iran-linked vessels was only 25, compared with 108 in the week before. On July 21, the number of vessels transiting the strait dropped by 31% from the previous day, to 9 vessels. Overall, the strait’s transit volume is down by about 90% versus pre-conflict levels.

More noteworthy are the structural changes. Nearly 70% of tanker transits are carried out using “dark voyage” mode—shutting off the Automatic Identification System (AIS) to avoid risks—whereas the ratio was only 55% in the previous week. The southern route supported by the U.S. saw only 2 ships use it during July 13 to 19. Iran’s Revolutionary Guards announced that the Strait of Hormuz is under its control and has been “completely closed,” warning that tankers may not enter or exit without coordination with Iran. The U.S. Central Command, however, insists that the strait is “still open to commercial shipping traffic.” The two sharply opposite statements themselves are the best footnote to persistently high transit risk.

Brent Crude Breaks $96: What Is the Logic Behind the Oil Price Rise and What Conditions Sustain It?

The Strait of Hormuz carries about one-fifth of global oil shipping volume. The direct consequence of the strait’s transit volume dropping by 90% is that supply-side contraction expectations are quickly priced into oil. On July 22, the Brent crude futures settlement price was $94.07 per barrel, up $3.06, a gain of 3.36%. On July 23, Brent crude rose further by $1.93 to $96 per barrel, setting a six-week high since June 8. WTI crude rose by $1.44 to $88.27 per barrel.

The rise in oil prices is not a simple linear logic of “lower supply → higher prices.” The deeper driver is the market pricing of the persistence of a “supply disruption.” The current conflict has lasted 12 days, and neither the U.S. nor Iran has shown clear signs of backing down. Trump threatened that as long as Iran fires on ships in the strait, the U.S. will bomb and destroy a bridge or a power plant in Iran. Iran has responded with “an eye for an eye.” In this “fight to negotiate” game, the market finds it hard to predict a short-term recovery on the supply side. The price spread between Brent’s near-month contract and its contract three months later has widened to $9.26 per barrel, the largest since May 22. This very structure of the forward curve itself is pricing in expectations of sustained supply tightness.

Fed Rate-Hike Probability Rises to 34.7%: How Do Inflation Expectations Suppress Risk Assets Through the Interest-Rate Channel?

Oil price gains transmit to macro policy expectations through two channels: first, they directly raise energy costs and lift overall inflation levels; second, through the inflation-expectations anchoring effect, they influence the market’s judgment about the Fed’s policy path. As of July 23, CME’s “FedWatch” shows that the probability of a 25-basis-point rate hike by the Fed in July has risen to 34.7%. On July 20, that probability was only 14.4%. In just three days, rate-hike expectations have doubled. The most important marginal driver is the oil-price surge caused by the escalation of the situation in the Middle East.

The yield on U.S. 2-year Treasury notes has risen to 4.301%, the highest level in more than a year. Interest-rate swap market indicators show that traders expect the probability of the Fed raising rates by 25 basis points next week to be about 31%. For crypto markets, the warming of rate-hike expectations means two layers of pressure: first, a rise in the risk-free rate increases the opportunity cost of holding Bitcoin; second, expectations of tighter liquidity suppress the valuation of overall risk assets. The probability that the Fed will keep rates unchanged in September has fallen to 22%, and the cumulative probability of a 25-basis-point hike is 54.9%—meaning the market is not only pricing in the likelihood of a July hike, but also pricing a more hawkish policy path than previously expected.

Bitcoin Oscillates Near $66,000: How Is Geopolitical Risk Reshaping Crypto Asset Pricing Logic?

On July 23, after Bitcoin rose to $66,180, it pulled back and traded in a narrow range between $65,000 and $66,000. Compared with the October 2025 peak near $126,200, Bitcoin is down by about 50% over the same period. This price action alone reveals a key fact: in this Middle East conflict, Bitcoin has not exhibited the traditional “safe-haven asset” attribute.

Bitcoin’s response mechanism to geopolitical conflicts is shifting from the “digital gold” narrative to the logic of “high-beta risk assets.” Initially, geopolitical shocks usually bring short-term selling pressure. After that, the market’s focus quickly moves from the conflict itself to its macro consequences—oil prices rising → inflation expectations heating up → rate-hike probabilities rising → risk appetite falling. Bitcoin’s pricing depends more on this indirect transmission chain than on a direct hedging reaction to the conflict. The U.S. spot Bitcoin ETF recorded a net inflow of $203.2 million on Tuesday, marking the sixth consecutive trading day of net inflows, but cumulative net outflows from May to June were about $6.9 billion. The slow pace of ETF fund returns reflects institutions’ cautious stance in the face of macro uncertainty.

Gold Nears $4,130 While Bitcoin Faces Pressure: What Market Signals Does Safe-Haven Asset Divergence Reveal?

On July 23, spot gold traded near $4,126 per ounce, after briefly touching the highest level since July 7 at $4,165.92. Divergence between the price paths of gold and Bitcoin is the key angle for understanding the current market pricing logic.

Gold’s rise reflects the traditional safe-haven logic: geopolitical risk rises → funds flow into safe assets. Bitcoin failed to rise in sync, indicating the market does not view it as a direct hedge against geopolitical risk. Analysts increasingly position Bitcoin’s drivers in the liquidity and inflation channels rather than a geopolitical-hedge narrative. Macroeconomic factors suppressing Bitcoin’s rebound include three aspects: the Fed’s June meeting minutes directly attributing inflation pressure to AI investment; the 10-year U.S. Treasury yield nearing 4.66%; and the ongoing geopolitical risk around the Strait of Hormuz.

The essence of this divergence is: gold is pricing “risk itself,” while Bitcoin is pricing “the consequences of risk produced through liquidity channels.” When the market believes geopolitical risk will lead to tighter liquidity, Bitcoin is actually under pressure. This is the core coordinate system for understanding the current crypto market pricing logic.

“Double Strait Crisis” Stacked Up: What Structural Shock Is the Global Energy Supply Chain Facing?

The Strait of Hormuz is not the only energy chokepoint under pressure right now. On July 20, Yemen’s Houthi forces announced a maritime navigation ban on Saudi Arabia, threatening to attack any vessel that docks at Saudi ports within its operational scope. This also exposes the Mandeb Strait, which connects the Red Sea and the Indian Ocean, to the threat of blockade. For the first time, two major Middle East energy chokepoints are simultaneously facing a real blockade.

From the supply side, once the Mandeb Strait is fully blocked, Saudi Arabia’s vast majority of oil will be unable to be exported, and global crude oil supply will fall by 7%. Coupled with disruption to Strait of Hormuz passage, about 25% of global crude oil supply will be difficult to secure. From the shipping side, the passage volumes of the Strait of Hormuz and the Mandeb Strait both declined on July 21. According to Kpler data, four vessels near the Gulf of Aden have already confirmed turning back.

This “double-lock” setup means the global energy supply chain is experiencing not a temporary shock, but a potentially persistent structural break. For crypto markets, this implies that elevated oil prices and rising inflation expectations are not short-term phenomena, but may become a mid-term constraint. The market needs to reassess the duration and magnitude of the “geopolitical risk premium.”

From Hormuz to Crypto Markets: How Does the Transmission Chain of Geopolitical Risk Affect Future Trends?

The impact of the current Middle East situation on crypto markets can be understood through a clear transmission chain: Strait of Hormuz passage disrupted → expectations of contraction in global crude oil supply → oil prices rise → inflation expectations heat up → probability of Fed rate hikes rises → risk-free rates rise → risk asset valuations come under pressure → Bitcoin faces macro headwinds. Every link in this chain has been validated by data during the last three weeks of July.

The market’s structural pricing for the Middle East conflict is undergoing significant adjustments. BlackRock maintains a high-risk rating for a broad Middle East conflict. The continued rise of the Geopolitical Risk Index (GPR), based on historical experience, will negatively affect private investment, employment, economic growth, and the stock market. For crypto markets, this means that macro uncertainty will continue to suppress risk appetite for a period of time.

But there is another side to the coin: if signs of easing emerge—for example, if the 10-day ceasefire proposal put forward by mediators gains progress—oil prices could fall quickly, and rate-hike expectations could cool down, creating a rebound window for Bitcoin. The bidirectional volatility characteristic of this “geopolitical risk premium” is itself an important source of volatility in today’s crypto market. For market participants, understanding the structure and tempo of this transmission chain may be more practically meaningful than simply tracking conflict news.

Summary

As of July 23, 2026, the U.S.-Iran conflict has lasted 12 days. The Strait of Hormuz transit volume is down by about 90% versus pre-conflict levels. Brent crude has broken $96 per barrel to set a six-week high. Geopolitical risk exerts macro pressure on the crypto market through the transmission chain of oil prices rising → inflation expectations heating up → probability of Fed rate hikes rising → risk appetite falling. Bitcoin is oscillating near $66,000, diverging from gold as it nears $4,130; this reflects that the market does not view Bitcoin as a direct safe-haven tool for geopolitical risk, but rather prices it as a high-risk asset influenced by liquidity expectations. The “double-lock” situation of the Strait of Hormuz and the Mandeb Strait implies that the supply-side shock may have medium-term persistence. Crypto markets need to find a new pricing equilibrium while navigating the tug-of-war between macro headwinds and repeated swings in the geopolitical premium.

FAQ

Q: What is the specific impact of the 90% drop in Strait of Hormuz transit volume on oil prices?

The Strait of Hormuz carries about one-fifth of global oil shipping. The sudden plunge in transit volumes directly triggers supply contraction expectations. Brent crude broke $96 per barrel on July 23 to a new high since June 8. The spread between the near-month contract and the three-month contract has widened to $9.26 per barrel, showing that the market is pricing in sustained supply tightness expectations.

Q: Why hasn’t Bitcoin risen due to the Middle East conflict like gold has?

Bitcoin’s current market positioning is closer to a high-beta risk asset than to a geopolitical hedging tool. The conflict is transmitted to Bitcoin through an indirect chain of oil prices → inflation → rate-hike expectations. When the market expects liquidity to tighten, Bitcoin is under pressure. Gold is pricing “risk itself,” while Bitcoin is pricing “the consequences of risk produced through liquidity.”

Q: How does the rising probability of Fed rate hikes affect the crypto market?

As of July 23, the probability of a 25-basis-point rate hike by the Fed in July has risen to 34.7%. Rising rate-hike expectations mean the risk-free rate will move higher, increasing the opportunity cost of holding Bitcoin, while also suppressing the valuation of overall risk assets. The yield on 2-year U.S. Treasuries has risen to 4.301%, the highest level in over a year.

Q: Is it likely that the U.S.-Iran conflict can ease in the short term?

Mediators such as Qatar, Egypt, and Pakistan have proposed a 10-day ceasefire plan, but as of July 23 there has been no clear progress. Both the U.S. and Iran have shown a “fight to negotiate” posture, so there is substantial uncertainty about whether the conflict can ease in the short term.