The last 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 rise while oil falls, the next day he talks hawkish again, causing BTC to fall and oil to rise. Meanwhile, Iran declares the Strait of Hormuz “closed forever” and analysts rule out wildly bullish and bearish oil targets. It is almost impossible to navigate this hectic environment.
Traders are better off focusing on the following real indicators that really matter. Unfortunately, this does not paint a positive picture for risk assets, including bitcoin.
The Mid-April SPR Cliff
The fate of the global economy and risk assets could depend on the next two weeks, as a managed oil disruption threatens to turn into an unmanaged disruption.
After the war with Iran began on February 28, oil tanker traffic through the crucial Strait of Hormuz, which handles about 20% of the world’s maritime oil trade, virtually collapsed. In response, the International Energy Agency’s 32 member countries agreed to the largest coordinated release of strategic stockpiles in its 50-year history: around 400 million barrels, later rising to 426 million as more countries collaborated.
Those emergency barrels have been making up for a supply shortfall of about 4.5 to 5 million barrels per day, the gap created by the near-shutdown of Hormuz flows.
But those reserves are now expected to hit the wall in the next two weeks, in which case that manageable deficit could double to about 10 to 11 million barrels per day (the projected shortfall due to depleted reserves and disruption to normal flows).
The House of Saud described it as “a shock of unprecedented scale with no obvious buffer to absorb it.”
So it doesn’t matter whether Trump continues the war against Iran or stops it. If oil supplies are not materially restored in the next two weeks, we could see massive risk aversion in traditional and cryptocurrency financial markets.
Shipping insurance premiums through Hormuz
A ship insurance premium is the payment the shipowner makes to an insurance company to protect against financial losses that could occur during the operation of the ship.
Insurance costs for sailing through the Strait of Hormuz have increased significantly, with reports indicating rates jumping from less than 1% of the ship’s pre-war value to as much as 7.5% per voyage. This means that a $100 million ship now has to pay between $2 and $3 million in insurance, up from $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 risks in the markets again. No Trump press conference, briefing, or Truth Social release can replicate the certainty implicit in those prices.
Tanker traffic
Trump sometimes suggested Passage through the Strait of Hormuz may be assured, but so far there is no clear evidence that tanker traffic has returned to normal levels.
In fact, only 21 tankers have transited Hormuz since the war began, compared to more than 100 ships a day before the conflict, according to S&P Global Market Intelligence.
A sustainable rally in risk assets requires this figure to increase materially; Until then, Trump’s attempts to calm markets are likely to be short-lived.
