Iran, Oil, and the Crypto Setup Nobody's Talking About
Trump's deadline for Iran is 8pm ET tonight. If Tehran doesn't reopen the Strait of Hormuz, he's going to, in his words, "Open the Fuckin' Strait, you crazy bastards, or you'll be living in Hell."
Now if you've been paying attention, you know this is Trump's negotiation playbook. He sets an extreme, unrealistic bar so that anything below it becomes a victory. It's classic anchoring. We saw this with Canada, when he said he was going to annex a G7 country, lol. And when that obviously didn't happen, he walked away claiming wins on trade concessions that were a fraction of what he originally demanded.
He's been doing this with Iran for weeks now too, setting deadlines and extending them over and over. Earlier it was 48 hours, then it was five days, then it was Monday. Now it's tonight at 8pm. With Trump, escalation IS the negotiation. He sets the most extreme bar possible, it doesn't happen the way he says, and whatever does happen he can realize a win because the anchor was so high that any outcome looks like progress.
It probably won't happen the way he's describing it. He's probably being hyperbolic. Big emphasis on probably.
We're in a binary outcome zone where either some version of de-escalation gets cobbled together and Trump can take a victory lap, or he follows through and we get another leg of escalation that sends crude higher and equities into a genuine selloff.
But the situation here is very relevant to crypto.
Crude is sitting around $115 a barrel, up yet another +3% today. I just came back from a road trip through New Zealand and I paid $3.80 a litre for diesel. That's the equivalent of about $8.20 USD per gallon in American terms...
Here's what this means for crypto.
Higher oil puts upward pressure on inflation. That means rate cuts get repriced lower, the U.S. dollar strengthens, and stocks weaken. And that's precisely what we've seen. S&P futures are backing off. The selling has been orderly with no spike in the VIX or panic yet.
But the longer we stay under pressure, the greater the odds we get that puke-and-panic moment. And that would be the catalyst to drag crypto lower.
Here's the thing about Trump: no president in modern history has let the stock market dictate his policy moves and public statements more than he has. He will say whatever he can to stop the bleeding. But in the short term, this administration wants escalation with Iran as a negotiation strategy, and that means more pressure on markets before any relief.
And even if crude oil backs off from here and this all turns out to be some big bluff, in the bull case, there will likely continue to be some disruption to supply lines, which means elevated crude for a bit longer, and then central banks will likely be forced to respond. We've already seen this in Australia with the RBA raising rates to get ahead of the curve on inflation.
This would mean a tightening of liquidity, and that could hit crypto also.
If that weakness comes, I think it sets crypto up for one of its best buying opportunities of all time.
In yesterday's post I talked about crypto's fragmentation between alternative finance and efficient finance. War, Iran, rates, none of that has anything to do with that. Banks and institutions will need to keep rolling out new infrastructure regardless of what crude does or what Trump orders tomorrow night.
Jamie Dimon, someone who's been famously skeptical of Bitcoin, just released his annual letter to shareholders. And what he said should be getting way more attention than it is
He identified a "whole new set of competitors emerging based on blockchain, which includes stablecoins, smart contracts and other forms of tokenization." He listed Block, Citadel Securities, Revolut, and Stripe as the most successful nontraditional competitors. No surprise there. But he then cited the "blockchain-based wave" as a distinct, additional category of threat. Translation: the fintech disruption of the 2010s was wave one. Tokenization is wave two. And JPMorgan is treating them as separate battles.
He then wrote that JPMorgan needs to "roll out our own blockchain technology," as core competitive strategy. Despite being publicly skeptical of Bitcoin, Dimon has spent years building out JPMorgan's blockchain capabilities. Their Kinexys platform already processes institutional payments on blockchain and their tokenized deposit product is live. This is operational infrastructure being built while the rest of the market panics about Trump's tweets.
I've been saying this for months; tokenisation is here. It's not coming. It's here.
And look, I'm not a permabull. Crypto is full of people who'd tell you every development is bullish. That's not me.
We're unequivocally in a bear market. Bitcoin is down 50% from its highs and most cryptos are completely uninvestable. But it's at these stages, the later chapters of bear markets, where I stop caring about trading 20% swings in Bitcoin or Ethereum and start focusing on quality assets I can own at a discount for the next 2-3 years.
If we see further volatility dragging crypto lower, that will be the buying opportunity of a generation for assets that have exposure to tokenisation.
Best,
Louis Sykes
Senior Crypto Analyst, All Star Charts
