Bitcoin has room to recover if diplomacy between Washington and Tehran continues to ease pressure on oil.
Evidence of significant de-escalation has emerged since March 23, with President Donald Trump ordering a five-day pause for “constructive conversations.”
At the same time, reports have emerged that the United States had sent a 15-point proposal to Iran through Pakistan, while Turkey had also passed messages between the two sides.
While there is no ceasefire yet and there are no signs of a firm negotiating path. Iran has publicly denied direct talks with Washington, and an Iranian military spokesman said the United States was “negotiating with itself.”
Still, the signs of diplomacy were real enough for markets to react, with Brent crude down 5.2% to $99.01 a barrel and US West Texas Intermediate down 5.1% to $87.62.
On the other hand, Bitcoin rose 1.6% to maintain its stable bounce above $71,000 as traders eased some of the inflation and interest rate fears that had built up during nearly four weeks of war.
Why this cautious diplomacy moves the market
The supply side explains the outsized response to headlines that amount to little more than mediated messages.
Iran is OPEC’s third-largest producer, pumping about 3.3 million barrels of crude oil per day and another 1.3 million barrels of condensate and other liquids per day. About 90% of crude oil leaves Kharg Island via the Strait of Hormuz, with exports recently between 1.1 million and 1.5 million barrels per day.
Data from the U.S. Energy Information Administration shows that flows through the Strait of Hormuz averaged 20.9 million barrels per day in the first half of 2025, representing about 20% of global petroleum fluid consumption. About 20% of global liquefied natural gas trade also passed through the strait in 2024.
However, that volume has virtually come to a standstill, with Andre Dragosch, head of research at Bitwise Europe, point out that there was “1 ship today” that passed the path.
Any discussion about the terms of a ceasefire, access to shipping or sanctions relief therefore has direct, volumetric market relevance for the oil market.
The forward curve sharpens things up. In the March outlook, the EIA prediction that Brent would remain above $95 a barrel for the next two months, before falling below $80 in the third quarter and heading towards $70 by the end of the year as disruptions subside and inventories rebuild.
The agency predicts that global oil supplies will rise by an average of 1.9 million barrels per day in 2026, once production exceeds consumption again.
This means that a credible diplomatic process does not have to immediately create an oversupply. It just needs to make that gentler path look more likely.
The March 2026 projections drawn up by European Central Bank staff quantify the stakes. The ECB has modeled an unfavorable energy scenario with an oil price of 119 dollars per barrel and gas of 87 euros per megawatt hour in the second quarter, causing inflation in the eurozone to rise by 0.9 percentage points.
Separately, Federal Reserve research shows that higher oil prices directly drive up headline inflation and, over a period of about eight quarters, create a smaller but statistically significant pass-through to food and core prices.
Considering this, crypto market maker Wintermute put it in trading terms, explaining that if Brent stabilizes around $100 and diplomacy holds, inflation fears linked to energy disruption should subside enough for “some of the rate cut expectations erased last week” to return.
The oil-to-tariffs transmission
The positive argument for Bitcoin here is that lower oil prices ease inflationary pressures. Moreover, it reduces the likelihood that central banks will keep interest rates tight for longer and improves the liquidity environment for risky assets more broadly.
Notably, during the ongoing US-Iran conflict, Bitcoin has largely acted not as a geopolitical hedge, but more as a high-beta expression of global liquidity conditions.
For context, the top crypto’s recent rebound above $70,000 is not driven by any crypto-native catalyst. Instead, it happened amid a sharp recovery in tech stocks and a stabilization in broader market risk.
The flow data reinforces that reading. According to CoinShares, digital asset investment products raised $230 million last week, with $219 million going to Bitcoin, even after $405 million in outflows following the Federal Open Market Committee meeting.
CoinShares attributed the pressure to the Fed’s aggressive stance, and not to the conflict with Iran. The dominant driver has been interest rates and liquidity, not isolated geopolitics.
That is why the repricing of interest rate futures carries a lot of weight. In recent weeks, the conflict threatened to trigger a stagflation shock as oil prices rose to record levels.
CryptoSlate had previously reported that interest rate futures implied virtually no chance of Fed cuts before mid-2027 as the conflict pushed up the energy sector. However, after Tuesday’s diplomatic headlines, there is an interest rate increase in December decreased from 25% to about 16%.
Federal Reserve Governor Michael Barr strengthened against the hawkish backdrop of March 24, saying policymakers may need to hold rates steady for “some time” and that he needs to see evidence of “sustainable decline” in inflation before considering further cuts.
What could happen next?
A lengthy diplomatic process without a formal breakthrough could still help Bitcoin if it shuts down oil production. If Brent remains near current levels, or moves lower as shipping fears subside, this would likely keep pressure off yields and reduce the urgency around higher-for-longer policy.
The EIA’s trajectory to oil below $80 in the third quarter provides a macro framework for that outcome. Under that kind of easing, BTC would have a clearer opening to revisit and push through the highs from earlier this month.
Meanwhile, a more credible ceasefire path would strengthen this case. The bigger impact would come from convincing markets that Hormuz is returning to normal use, that the regional energy infrastructure is no longer in the crosshairs, and that the inflationary shock of the war is beginning to fade.
The ECB’s projections show how much difference that can make. Even small changes in the assumed oil path cause meaningful changes in inflation and growth forecasts.
However, a collapse of the talks would revive the entire chain in reverse. Oil prices would likely rise again, fears about shipping risks would rise again and markets would have to price in a tougher policy stance from the Fed and other central banks.
Past market performance has already shown how quickly that adjustment can take place. Within days, traders switched from expecting cuts later this year to pricing in a meaningful chance of a rate hike in December, before easing their bets as oil fell amid diplomatic headlines.
Bitcoin can still rise in wartime, but the cleaner path to the surface comes when the energy shock starts to subside.