In February this year, when the US and Iran started fighting, the total crypto market cap evaporated by $70 billion within 44 minutes. In March, the conflict escalated, and the entire market struggled in a bear market.
US-Iran conflict → Strait of Hormuz passage restricted → Brent crude oil surges past $100 → Inflation expectations heat up → Fed hawkish pressure increases → US Treasury yields soar, dollar strengthens → BTC, an asset that produces no cash flow, is the first to be dumped.
On September 9, Brent crude oil broke through $100 per barrel for the third time this year, and WTI surpassed $95. On the same day, US-Iran mutual attacks escalated: the US military destroyed 5 Iranian oil tankers, and Iran struck a US base in Jordan.
Then what?
On September 16, the Fed raised interest rates by 25 basis points. This was the first hike since July 2023.
The market had already priced in a 92.5% chance of a September rate hike before the meeting. On Polymarket, the probability of a September hike bet once surged to 89%.
You think Trump is the one fighting Iran?
Actually, oil prices are making the decision for the Fed.
The question now is: what’s next?
On September 22, Trump met with the Gulf Six countries, saying they would discuss a "post-war strategic vision." He said two things simultaneously — "a large-scale military operation could be restarted," and "Iran still hopes to reach an agreement."
Neither statement rules anything out. What does this mean?
It means the market will continue to oscillate between "fighting" and "talking," oil prices will jump back and forth, rate hike expectations will follow oil prices, and your positions will be repeatedly squeezed by rate hike expectations.
But there is one signal everyone is ignoring.
Brent crude has fallen for the fourth consecutive trading day, dropping 2% on Monday to around $101 per barrel. Oil prices are retreating.
This is the real bullish signal for the crypto market.
Not because "peace is coming."
But because oil prices falling → inflation expectations easing → Fed’s hawkish grip loosening by a notch.
What crypto fears most now is not rising oil prices, but the entire chain of "oil prices rise → inflation heats up → US Treasury yields rise → dollar liquidity tightens" restarting.
Watching US-Iran talks is right.
But don’t forget to watch oil prices and the Fed officials’ words.
If after Trump’s talks with the Gulf countries on September 22, oil prices continue to fall, that’s your signal to add to your position.
If talks break down and oil prices surge back to $110, the probability of a Fed rate hike in October will climb from the current 56.5%.
Your positions will once again become fuel for the macro game.
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