At the end of February 2026, the US and Israel launched military strikes against Iran, causing a sudden escalation in Middle East tensions. On March 2, Iran officially announced the closure of the Strait of Hormuz, a vital maritime route that carries about 20% of the world’s oil shipments. As a result, by the end of March, daily crude oil flows through the strait had plummeted by nearly 90%. Six countries, including Saudi Arabia and Iraq, were forced to cut daily production by over 9 million barrels. Brent crude oil futures on the Intercontinental Exchange in London soared more than 60% in March alone—a record monthly gain. Spot Brent prices briefly surged to $141.36 per barrel, the highest level since the 2008 financial crisis.
As markets were still digesting the energy shock, another chain reaction began to unfold: the Federal Reserve’s monetary policy outlook was completely rewritten, and expectations for rate cuts in 2026 virtually vanished. Amid these sweeping macro changes, Bitcoin displayed price behavior starkly different from gold, prompting a new round of debate over the "digital gold" safe-haven narrative.
Structural Breakdown: Why Did Traditional Safe-Haven Logic Fail Simultaneously?
Gold and US Treasuries have long been global capital’s go-to "safe harbors" during risk events. However, during the Strait of Hormuz closure, both assets saw their traditional safe-haven roles eroded. Spot gold fell more than 11% in March alone and continued to drop on April 3, closing at $4,676.86 per ounce—a daily decline of $81.40. Meanwhile, the benchmark 10-year US Treasury yield climbed to 4.45%, and the real yield (10-year TIPS) rose to 1.97%. This price action shattered the conventional expectation that "war is bullish for gold and drives flows into Treasuries." The underlying structural reason: the core transmission mechanism of this shock was not traditional safe-haven demand, but rather the dual pressures of "inflation and interest rates" triggered by a disruption in energy supply. As surging energy prices pushed up inflation expectations, markets began pricing in a Federal Reserve forced to maintain high rates—or even hike further. This sharply raised the opportunity cost of holding gold, while Treasuries faced selling pressure due to rising rate expectations. The simultaneous stress on gold and Treasuries during this crisis marks a profound structural breakdown in the traditional safe-haven framework.
Double Pressure: How Do Oil Price Shocks and Hawkish Signals Create a Negative Feedback Loop?
A tight causal chain is forming between geopolitical shocks and monetary policy expectations. Iran’s closure of the Strait of Hormuz has disrupted about 20 million barrels of daily crude oil shipments—accounting for 48% of global oil trade and 20% of daily global oil consumption. The head of the International Energy Agency (IEA) warned that daily supply losses from this conflict have reached 12 million barrels, surpassing the combined impact of the 1973 and 1979 oil crises and the 2022 Russia-Ukraine conflict. The IEA expects the oil shortfall in April to double that of March. Soaring oil prices are directly fueling inflation expectations; eurozone inflation reached 2.5% in March. Against this backdrop, the Fed’s hawkish stance has only strengthened. The New York Fed President stated he "still favors keeping rates unchanged," and the Fed Chair described monetary policy as "well positioned." Market bets on rate cuts in 2026 have nearly vanished, with interest rate swaps at one point even pricing in a rate hike by year-end. The oil price shock and hawkish signals have created a negative feedback loop: rising oil prices → higher inflation expectations → Fed remains hawkish → risk assets under pressure → expectations of economic slowdown intensify → further supply-demand imbalances. This self-reinforcing cycle is fundamentally reshaping the pricing environment for all asset classes.
The Cost Ledger: Hidden Costs to the Global Economy Are Mounting Rapidly
The impact of the Strait of Hormuz closure extends far beyond oil prices. On the supply chain front, by the end of March, refinery utilization rates in major consumer countries such as India, Japan, and South Korea had dropped by 8 to 15 percentage points. The IEA has agreed to release 400 million barrels from strategic oil reserves, but this covers only 7% of global demand, while the shipping disruption is affecting 15% to 17% of global demand—"a drop in the bucket" hardly describes the magnitude of the shortfall. In the US, average gasoline prices have breached the psychological threshold of $4 per gallon. If sustained, this would add over $1,000 in annual expenses for the average American household. More importantly, the timeline for restoring production capacity remains uncertain: even if hostilities end soon, restarting idled oil production will take considerable time. The CEO of Kuwait Oil Company stated that full restoration could take another three to four months. This means high oil prices may persist far longer than initial market expectations, and the cumulative economic costs will become increasingly evident over the coming quarters.
Diverging Safe-Haven Assets: What Role Does Bitcoin Play in a Stagflation Narrative?
With both gold and Treasuries under pressure, Bitcoin’s price action has become a notable variable. As of April 3, 2026, Bitcoin was trading around $67,000 on the Gate platform, down about 1.8% over 24 hours—a much smaller swing than gold’s 11%+ monthly drop in March. Looking over a longer horizon, Bitcoin posted a 2% gain in March, snapping a five-month losing streak, and demonstrated greater price resilience than most traditional assets throughout the conflict. Market analysis suggests that Bitcoin’s sensitivity to both positive and negative news has diminished in recent weeks, forming a relatively independent trading range. This behavior warrants closer examination: gold’s weakness stems from higher holding costs in a high-rate environment, while Bitcoin’s independence is partly due to its supply rigidity—soaring oil prices and rising global inflation expectations logically reinforce Bitcoin’s "digital hard asset" narrative. Additionally, some market participants view Bitcoin as a hedge against fiat currency confidence; when energy shocks combine with fiscal stress, this narrative gains new traction. The divergence between Bitcoin and traditional safe-haven assets is redefining its role during macro risk events.
Two Diverging Paths: FOMC Decision and Nonfarm Payrolls to Set Market Direction
The coming month will be pivotal for asset price direction. The US March nonfarm payrolls report, due April 4, will be the first major test. Markets generally expect 50,000 to 65,000 new jobs in March—a rebound from February’s weak 9,200 figure, but still well below the pace of a healthy expansion. The unemployment rate is expected to hold near 4.4%, with average hourly earnings rising 0.3% to 0.4% month-over-month. The nuance: weak job growth but sticky wages is the market’s most feared "stagflation" signal. If the data deteriorates further—job growth below 50,000 and wage growth above 0.5%—the stagflation narrative will be reinforced, putting the Fed in a bind: unable to cut rates to stimulate the economy, yet still facing inflationary pressure.
Next up is the late-April FOMC meeting. Market pricing for the Fed’s policy path has shifted from "rate cuts" to "on hold," with some even factoring in rate hike risks. However, some institutions have recently pushed back against this hawkish consensus, arguing that inflation and rate hike risks from supply shocks are far lower than in the 1970s or 2021–2022. The existence of such disagreements suggests market expectations could still shift dramatically—either way, this will have a significant impact on the crypto market. The trajectory of the Middle East conflict is a third key variable. Some analysts forecast a 25% chance of resolution by the end of May, a 45% chance by fall 2026, and a 35% chance of the conflict extending into 2027. If tensions ease, oil prices could quickly fall $10–$15 per barrel, relieving some hawkish pressure on the Fed. If the conflict escalates and the Bab-el-Mandeb Strait is also closed, Brent crude could jump from $150 to $200 per barrel within weeks.
Reassessing Risk: Three Major Undervalued Market Shocks
Current market pricing may still underestimate certain tail risks. First, the production recovery timeline after energy facility attacks is being seriously underestimated. If energy infrastructure in Iran, Saudi Arabia, the UAE, or Qatar is damaged in retaliatory strikes, even a ceasefire would require months to restore production. This could mean high oil prices persist far longer than the market anticipates, with more lasting effects on inflation and interest rates. Second, the supply shortfall could be nonlinearly amplified. Some analysts warn that if the Bab-el-Mandeb Strait is also closed, average Brent prices could hit $130 per barrel. A "double chokepoint" scenario, with both major shipping lanes blocked, would fundamentally rewrite the baseline assumptions of the global energy supply chain. Third, policymakers’ room for maneuver is shrinking. The IEA chief has made it clear that further releases of oil reserves cannot fundamentally solve the problem; the only real solution is to reopen the Strait of Hormuz. With the geopolitical deadlock proving difficult to break, effective policy tools are rapidly dwindling. If these three risk factors combine, market volatility could be far more severe than current pricing suggests.
Conclusion
The Strait of Hormuz closure is triggering a deep restructuring of global asset pricing logic. Oil prices have surged above $116, Fed rate cut bets for 2026 have completely evaporated, and gold and Treasuries are under simultaneous pressure—these three signals all point to one conclusion: the traditional "safe-haven asset" framework is being eroded by the dual pressures of inflation and interest rates. Amid this structural shift, Bitcoin has shown resilience distinct from gold. Its price action is supported by both the hard asset narrative and as a barometer of confidence in fiat systems, and its divergence from traditional safe havens is forming new market logic. Over the next month, nonfarm payrolls, the FOMC decision, and developments in the Middle East will together determine whether this divergence trend continues or reverses. Regardless of direction, a more complex macro pricing environment is emerging, and the role of crypto assets will continue to be tested and redefined.
FAQ
Q: Is there still a chance the Fed will cut rates in 2026?
Based on current market pricing and statements from Fed officials, the likelihood of a rate cut in 2026 has dropped sharply. The New York Fed President and several others have clearly indicated a preference for holding rates steady, and market bets on cuts have almost entirely disappeared. However, some institutions believe the market’s hawkish stance may be overdone, noting that today’s inflation risks from supply shocks are much lower than in comparable historical periods. The final direction will depend on nonfarm payroll data and developments in the Middle East.
Q: How long will the Strait of Hormuz closure impact oil prices?
The duration depends on three variables: how quickly the strait reopens, the scale of oil reserve releases, and how long the conflict lasts. Even if hostilities end soon, restarting idled oil production could take three to four months, so oil prices are unlikely to quickly return to the pre-conflict level of around $65 per barrel. Multiple institutions forecast Brent prices will remain elevated through April, averaging about $125 per barrel, with a possible drop to around $80 per barrel by year-end.
Q: Why has Bitcoin shown resilience during this crisis?
Bitcoin gained about 2% in March, ending a five-month losing streak, and outperformed gold, which fell over 11% in the same period. Several factors underpin this resilience: Bitcoin’s fixed supply supports its narrative during rising inflation expectations; its sensitivity to both positive and negative news has decreased in recent weeks, creating a relatively independent trading range; and some market participants view Bitcoin as a hedge against fiat currency confidence. However, Bitcoin still faces macro pressures—US spot Bitcoin ETFs saw outflows of about $110 million in March, indicating institutional allocations remain sensitive to macro changes.
Q: Why is the upcoming nonfarm payrolls report so critical?
The March jobs report (due April 4) will be a key signal for whether the US economy is entering a "stagflation" regime. Market expectations for job gains are 50,000–65,000, well below the pace of a normal expansion. If job growth falls below 50,000 and wage growth exceeds 0.5%, the stagflation narrative will be reinforced, making it difficult for the Fed to cut rates to stimulate the economy. Conversely, if the data show moderate economic cooling, it could leave room for future policy easing.
Q: What might the FOMC decide at the end of April?
The consensus is that the Fed will keep rates unchanged at the late-April FOMC meeting. The Fed Chair has said monetary policy is "well positioned" to assess the economic impact of the Iran conflict. The key will be how the Fed frames its outlook for inflation and growth—will it acknowledge that the oil price shock could bring more persistent inflation, or treat the current shock as temporary? This guidance will directly affect market expectations for the future path of interest rates.
