Iran conflict deemed “very complete” by Trump — oil prices drop and Bitcoin rises above $70,000

Bitcoin rose back above $70,000 on Tuesday as crude oil experienced a significant reversal, alleviating immediate concerns regarding rising inflation and allowing digital asset markets to recover.

As per data from CryptoSlate, the leading cryptocurrency surged over 5% in the past 24 hours, reaching a peak of approximately $71,164 after dipping below $68,000 earlier in the day.

Brent crude dropped more than 6% to around $90 per barrel, reversing much of the previous day’s increase that had briefly elevated the international benchmark to nearly $120. West Texas Intermediate (WTI), the US benchmark, saw a similar decline as traders reassessed the duration of the geopolitical premium in energy markets.

The coordinated movements in crude and crypto illustrate the close connection between Bitcoin’s short-term price fluctuations and macro liquidity indicators.

When oil prices surged on March 9, investors began to factor in the possibility that renewed energy inflation could postpone Federal Reserve rate cuts, tightening the financial conditions that have supported risk assets throughout this cycle.

However, the current decline in oil prices has unwound some of that positioning, providing Bitcoin buyers with a more favorable entry point.

What caused the drop in oil prices today?

The sharp reversal in oil prices followed rapid developments in the Middle East that altered expectations regarding the duration of the geopolitical premium.

Traders highlighted President Donald Trump’s remarks to CBS, indicating that the Iran conflict is “very complete, pretty much,” a statement that markets interpreted as a potential sign of de-escalation.

Trump also mentioned that the US might seek to take control of the Strait of Hormuz and cautioned that if Iran disrupts the flow through the corridor, the United States would respond with significantly greater force.

He posted on Truth Social:

“If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far.”

The Strait of Hormuz is a vital chokepoint for energy markets, with approximately 20% of global oil consumption, 27% of global seaborne oil trade, and 20% of global LNG trade passing through it.

In light of Trump’s comments, traders were left to navigate between two competing timelines: one where the geopolitical premium in crude dissipates quickly and inflation fears diminish, and another where the disruption continues long enough to contribute to price pressures and central bank policy.

In addition to Trump’s remarks, G7 finance ministers also discussed the potential for releasing oil into the market to temper the rise in crude prices. The group comprises France, Japan, Germany, Italy, Canada, the United Kingdom, and the United States.

During their virtual meeting on March 9, they stated:

“We stand ready to take necessary measures, including to support global supply of energy such as stockpile release.”

Reports indicated that the volumes being considered ranged from 300 million to 400 million barrels.

Collectively, these developments prompted traders to reevaluate Middle East risks and unwind part of the geopolitical premium embedded in crude.

How did Bitcoin’s price rebound?

The reversal in oil prices provided traders with an opportunity to regroup, and some aspects of the crypto market began to appear less strained, even as energy markets remained volatile.

Data from SoSoValue indicated significant institutional interest in Bitcoin, with net inflows of $167.03 million into the 12 spot Bitcoin ETF products.

This marked a turnaround from the weak performance of the 12 funds in the last two trading sessions, which had seen over $500 million withdrawn from these investment vehicles.

Simultaneously, CryptoQuant observed that stablecoin liquidity has begun to rise again after a lackluster performance earlier this year.

Stablecoins Exchange Reserve (Source: CryptoQuant)

According to the firm, this type of shift is often viewed as an indirect indicator of demand, suggesting that fresh capital is entering the market. Notably, DeFiLlama data revealed that stablecoin supply recently reached a new all-time high of $313 billion.

Meanwhile, BTC options positioning data from Coinbase-owned Deribit indicated that BTC traders had significant call buying concentrated around the $75,000 and $80,000 strike prices prior to the oil shock.

This was supported by blockchain analysis firm Glassnode, which stated:

“Options markets have become less defensive. The volatility spread narrowed significantly as implied volatility moves closer to realized conditions, while 25-delta skew declined, indicating softer demand for downside hedging and a more balanced near-term backdrop.”

US CPI data will determine if BTC’s recovery sustains

The next challenge for Bitcoin’s recovery will come with the US inflation data set to be released later this week.

Headline consumer price growth has been slowing in recent months, and survey-based measures of short-term inflation expectations had decreased before the sudden spike in oil prices, reinforcing a widely held belief that disinflation remains the prevailing trend.

Furthermore, market-based measures, including Treasury breakeven inflation rates, increased in the days surrounding the crude shock, indicating that bond investors were pricing in some likelihood of renewed energy-driven price pressures while awaiting confirmation.

This divergence positions BTC’s recovery as conditional. If the upcoming inflation readings align with the disinflation narrative, the macro environment supporting Bitcoin’s recovery would strengthen, and the options market’s positioning near $75,000 to $80,000 could start to exert a gravitational pull on spot prices.

Importantly, oil’s fundamentals prior to the US-Iran geopolitical tensions also pointed in that direction.

Major energy agencies, such as the International Energy Agency (IEA), had projected production growth to outpace demand for the remainder of the year, and global inventories had been increasing before the disruption occurred.

Thus, a crude market that stabilizes back toward pre-conflict levels would lower the inflation risk premium and provide the Fed with the flexibility to proceed with the rate cuts that investors had been anticipating.

However, the adverse scenario involves a situation where crude fails to maintain its reversal.

A renewed surge in oil prices above $100 would likely elevate breakeven inflation rates, solidify expectations regarding Federal Reserve policy, and compress the valuations of broadly rate-sensitive risk assets.

In such an environment, Bitcoin would likely move in tandem with high-beta equities, and the focus would shift back to whether spot prices can maintain the support levels that briefly failed in previous sessions.

In summary, analysts at Bitfinex informed CryptoSlate that:

“If ETF flows stabilize and macro conditions remain neutral, BTC could trend toward the low-$70,000 range. However, if oil-driven inflation pushes yields higher again, a retest of the $60,000 support level becomes increasingly probable.”

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