The crypto market crash accelerated on Saturday as the war in Iran continued, pushing crude oil and natural gas prices to the highest level in years. Bitcoin sank to $67,000, while Ethereum dropped to $1,700. Other top losers were tokens like Kite, Ethena, Sky, Zcash, and Aptos, which fell by over 6% in the last 24 hours.
Crypto Market Crash Resumes as Crude Oil Prices Soar
The main reason for the ongoing crypto crash is fear that the ongoing war in Iran will continue for a long time, a move that has already caused an energy shock that will lead to higher inflation over time.
Data shows that Brent, the global benchmark, surged to $92 on Friday, almost double where it started the year at. West Texas Intermediate, which is the US benchmark, surged to $90. Heating oil and gasoline prices have jumped by 70% and 61% this year. Worse, TTF gas, the European benchmark, has soared by 87%.
Energy prices may continue rising in the coming weeks as long as the war continues even as Iran announced that it will not attack its neighbors again.
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The ongoing war, together with the rising oil prices, is bad for the crypto market for a few reasons. For example, Bitcoin’s role as a safe-haven asset has been invalidated as it has fallen whenever a major risk arises.
At the same time, the soaring energy prices mean that inflation will come back up again, ending the recent declines. The most recent data showed that the headline Consumer Price Index (CPI) dropped to 2.4% in January from last year’s high of over 3%.
A high inflation means that the Federal Reserve will not be able to cut interest rates. Indeed, Polymarket odds of Fed interest rate cuts have tumbled in the past few days.
Therefore, there is a risk that the crypto market crash will continue in the foreseeable future as long as the war in Iran continues. For one, some analysts believe that crude oil prices could surge to $150 or even $200 the longer the war in Iran continues.
A Key Silver Lining Remains
On the positive side, this war will not last forever, especially now that the US will go to an election later this year. Also, Donald Trump plans to visit China later this year. China could cancel the visit as the war continues as Iran is a key ally.
Therefore, there is a likelihood that Bitcoin and other altcoins will bounce back and start a new bull run when this happens. A good example of this is what happened on Wednesday when a crypto market rally started after reports that Iran had reached out to the United States.
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