The war between the US and Iran continues, with the two countries yet to reach an agreement, and US President Donald Trump threatening new attacks against Iran. Amid this, Iran has taken steps to… Bitcoin supported service as it appears to be able to exert control over the Strait of Hormuz.
War between the US and Iran in focus amid the threat of Trump and the new Bitcoin service
According to one Reuters reports thisUS President Donald Trump has threatened that a new US attack on Iran could take place in the coming days if the two sides fail to reach an agreement. This came amid his revelation that he was on the verge of ordering an attack on Iran earlier this week, before delaying subsequent pleas from the leaders of the UAE, Qatar and Saudi Arabia. In particular the War between the US and Iran is now approaching the three-month mark and a peace agreement has yet to be reached.
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The main argument remains Iran’s nuclear program, which the country has so far rejected. Meanwhile, Iran had sent a revised proposal earlier this week, which the US rejected. The proposal aimed at a long-term ceasefire in the US-Iran war and the gradual reopening of the Strait of Hormuz. The closure of this major oil bottleneck continues to impact the markets, with oil sitting above $100 a barrel while Bitcoin and the broader crypto market decline.
Meanwhile, amid the closure of the Strait of Hormuz, Iran has been launched a Bitcoin-backed insurance service for shipping in this oil chokepoint. The service called “Hormuz Safe” aims to offer insurance policies for cargo moving through the Persian Gulf, the Strait of Hormuz and surrounding waterways, with payments in Bitcoin. Iran adopted Bitcoin to circumvent US financial sanctions, which were tightened during the US-Iran war.
War that sends inflation to multi-year highs
The war between the US and Iran is also decisive American inflation to multi-year highs, putting downward pressure on Bitcoin and the broader crypto market. US PPI inflation rose 6% year-on-year (y-o-y) in April, the highest increase since December 2022. At the same time, US CPI rose 3.8% in April, the highest increase since May 2023.
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With inflation rising due to the US-Iran war, the market continues to price a rate hike rather than a cut as the Fed’s next likely move. Polymarket data shows a 28% chance of a Fed rate hike this year. Meanwhile, further data from Polymarket shows a 70% chance that the Fed will make a zero interest rate cut this year due to inflation concerns. A possible interest rate increase is bearish on Bitcoin as it could limit liquidity with higher interest rates.
At the time of writing, the Bitcoin price is trading around $77,000, up in the past 24 hours. facts from CoinMarketCap.
Featured image from Getty Images, chart from Tradingview.com