The past four weeks have been brutal for bitcoin traders as prices continue to chase comments from President Donald Trump who can’t make up his mind on Iran.
One day he talks peace and BTC and risk assets go up while oil falls, the next day he talks hawkish again which sends BTC down and oil up. Meanwhile, Iran declares the Strait of Hormuz “closed forever” and analysts wildly throw out bullish and bearish oil targets. It is almost impossible to navigate this choppy environment.
Traders may be better off focusing on the following real indicators that actually matter. Unfortunately, these do not paint a positive picture for risk assets, including bitcoin.
The SPR rock in mid-April
The fate of the global economy and risk assets may hinge on the next few weeks as a managed oil disruption threatens to become an unmanaged one.
After the Iran war began on February 28, tanker traffic through the central Strait of Hormuz, which handles about 20% of the world’s seaborne oil trade, collapsed. In response, the International Energy Agency’s 32 member nations agreed to the largest coordinated strategic stockpile release in its 50-year history — about 400 million barrels, later raised to 426 million as more countries jumped on the bandwagon.
These emergency barrels have offset a supply shortfall of about 4.5 to 5 million barrels per day, the gap created by the near-shutdown of the Hormuz Stream.
But now those reserves are expected to hit the wall in the next few weeks, in which case the manageable shortfall could double to about 10 to 11 million barrels per day — the expected shortfall due to reserve depletion and disruption of normal flows.
The House of Saud described it as “a shock of unprecedented magnitude with no apparent buffer left to absorb it.”
So it doesn’t matter whether Trump continues the war against Iran or stops. If oil supplies are not significantly restored within the next two weeks, we could see massive risk aversion across both crypto and traditional financial markets.
Send insurance premiums through Hormuz
A ship insurance premium is the payment a ship owner pays to an insurance company to protect themselves against financial losses that may occur during the operation of the ship.
Insurance costs for navigating the Strait of Hormuz have risen significantly, with reports indicating rates have jumped from less than 1% of the ship’s value before the war to as high as 7.5% per trip. This means that a $100 million ship now has to pay about $2-3 million in insurance, compared to $250,000 before the conflict.
When premiums fall below 2%, it is the clearest sign that the route is indeed safer and it is time to take risk in the markets again. No press conference, briefing or Truth Social post from Trump can repeat the certainty embedded in these awards.
Tank traffic
Trump has at times proposed that passage through the Strait of Hormuz can be secured, but so far there is no clear evidence that tanker traffic has returned to anything like normal.
In fact, only 21 tankers have passed through Hormuz since the war began, compared with more than 100 ships daily before the conflict, according to S&P Global Market Intelligence.
A sustainable recovery in risk assets requires this number to rise substantially; until then, Trump’s attempts to calm markets are likely to be short-lived.
