Bitcoin and the spillover from the Strait of Hormuz

Welcome to the State of Crypto Weekly, an investor-focused newsletter from 21shares that dives into the key trends driving the digital asset landscape.

On February 28, the US and Israel launched coordinated strikes against Iran, assassinating Supreme Leader Ali Khamenei in the Middle East’s most consequential political shock since Saddam Hussein’s fall. Iran retaliated by striking Gulf energy infrastructure, including Saudi Arabia’s Ras Tanura refinery, and closing the Strait of Hormuz.

This week, we’re exploring what the Strait of Hormuz means for Bitcoin.

WHAT THE STRAIT OF HORMUZ MEANS FOR BITCOIN

Regime change, oil shock, and Bitcoin’s inflection point

Markets don’t price conflicts; they price consequences. The Iran shock carries implications across energy markets, monetary policy, and the broader regional order. For Bitcoin, the most immediate transmission runs through oil: less crude flowing through the Strait of Hormuz means higher energy prices, stickier inflation, and a Federal Reserve with reduced room to ease.

Within 48 hours of the strikes, Bitcoin flows off Iranian exchanges into self-custody surged roughly 700% above the prior baseline – a pattern previously observed during the country’s 2024 protest wave. In absolute terms, roughly $10.31 million moved in that window, in a country that processed an estimated $7.8 billion in crypto activity last year. The significance lies not in the dollar amount but in the velocity of the shift. Iran’s parallel financial infrastructure is activating.

What role do crypto assets play when geopolitical tensions rise?

This Wednesday, hear what our experts have to say

Global Head of Research Eliezer Ndinga and Chief Investment Strategist Adrian Fritz are scheduled to host a webinar to delineate prevailing market indicators amid the current geopolitical escalations and analyze the implications of the conflict for crypto assets.

RESERVE YOUR SPOT IN THE WEBINAR GOING LIVE ON MARCH 11 AT 4 PM CET

WORDS OF WISDOM
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Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

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The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.