Oil Price Cools Off, Crypto Bounces Back
Woke up to an oil price crash.
The historically high oil price, which surged to $110 per barrel just yesterday, experienced a monumental collapse today, plummeting over 30% in a single day, briefly dipping below $84 per barrel, causing a sensation across the internet.
The BlockBeat's editorial team wrote an article yesterday titled "Why does oil rise when Bitcoin falls?," analyzing the relationship between oil and Bitcoin prices. As per the logic we discussed earlier, with this morning's oil price crash and temporary easing of inflation expectations, Bitcoin saw a significant rebound, crossing back above the $70,000 mark.
This once again demonstrates Bitcoin's characteristic as a "liquidity thermometer." Once the signal of inflation, driven by rising oil prices, cools off, market fears of interest rate hikes subside, liquidity expectations recover, and Bitcoin swiftly recovers lost ground.
This back-and-forth movement also reflects the latest tone-setting on the war situation by the Trump administration.
In his speeches last night and this morning, Trump's attitude underwent a subtle but crucial shift. Despite his previous strong demands for Iran's "unconditional surrender," he stated in the latest press conference that the military operations of the U.S.-Israel coalition are "proceeding very smoothly and ahead," hinting that the main military objectives have been "basically completed."
At the same time, Trump also hinted at a ceasefire, stating that this conflict will be resolved "very soon." Although he did not provide a specific ceasefire timetable, this "mission almost accomplished" posture greatly alleviated market fears of a "protracted war" and "total war."
Meanwhile, concerns about the Strait of Hormuz eased significantly this morning. The core logic behind the previous oil price surge was the market's fear of the blockade of this global passage where nearly one-fifth of the world's oil transits. Trump today played several cards on the supply side: announcing plans to directly escort oil tankers with the U.S. Navy, considering exemptions from some energy sanctions to hedge the Middle East gap, and mentioning the mobilization of approximately 100 million barrels of oil from Venezuela into the market.
Simultaneously, the G7 group of finance ministers issued a joint statement, indicating that countries have reached a consensus and are prepared to release emergency strategic oil reserves at any time. With this multi-pronged approach, a large amount of short-term speculative funds began to unwind their positions around the $120 mark.
Is Trump Really Calling for a Ceasefire?
Early risers have read numerous military analyses, with most suggesting that similar to the "famous for being famous" approach at the start of the war, what Trump is currently seeking is a dignified "declaration of victory" and a withdrawal strategy to promptly and gracefully end military operations.
From a military perspective, the U.S. achieved a "significant victory" at the beginning of the war with its targeted "decapitation" strikes against senior Iranian officials and the substantial destruction of the Iranian Air Force and Navy. Therefore, some analysts believe that as long as actual control of the Strait of Hormuz is established, whether through the U.S. military or the intervention of American security firms, it is sufficient to ensure the security of the energy passage.
This "take the win and run" mentality stems from the Trump administration's reluctance to repeat past mistakes. Trump is acutely aware of the complexity of the Middle East situation and is concerned that a long-term presence of ground forces would lead to endless guerrilla warfare and civilian resistance, ultimately evolving into a protracted and costly conflict akin to the Iraq War.
Driving Trump's desire to de-escalate quickly is not just a military assessment but also a more practical "pain point" from an economic perspective: oil prices and inflation.
The chain reaction caused by surging oil prices has put considerable pressure on the U.S. domestic economy. With crude oil prices briefly surpassing $119 per barrel, domestic trucking costs in the U.S. have significantly risen. This increase in logistics costs directly translates to higher end-consumer prices, leading to a comprehensive rise in prices. Trump is acutely aware that if oil prices are not quickly stabilized, uncontrolled inflation would directly threaten his political reputation, and he could even be attacked by opponents for his inability to govern effectively. Therefore, by releasing the expectation that "the war will end soon" to combat speculative trading in the financial markets and induce a sharp drop in oil prices back below $90, he sees this as a key means to alleviate domestic economic contradictions.
Furthermore, this analysis suggests that the U.S. domestic security situation and the midterm election agenda are also influencing factors. The U.S. has already seen signs of a suspected "Sleeping Cell" terrorist threat domestically, with arrests of immigrants manufacturing bombs in places like New York. This domestic security turmoil triggered by the war is a driving force for Trump to urgently "settle" things.
Simultaneously, Trump is actively pushing for the passage of the "Save America Act," seeking to pave the way for the midterm elections through measures such as standardizing citizen identity voting. For Trump, he is more willing to focus his energy on elections and domestic governance rather than linger long-term on a battlefield that could erupt into terrorism at any moment and is draining resources daily. Therefore, he needs to find a balance and withdraw troops as quickly as possible in the next one to two weeks.
Therefore, the framework we discussed in our previous article now has a new variable: the duration of the war may be shorter than the most pessimistic expectations.
If Trump does find that "declare victory" moment soon, the geopolitical risk premium on oil prices will quickly diminish, the inflation narrative will cool down, and the Fed's interest rate cut trajectory will reopen. At that point, what Raoul Pal talked about regarding liquidity expansion logic will no longer be just a medium-term expectation but may arrive faster than most people anticipate.
Today's Bitcoin rebound may just be a preview.
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