The recent closure of the Strait of Hormuz by Iran has not caused a significant reaction in the crypto market, with Bitcoin and Ether showing little change in value. This is a notable departure from previous incidents, where such closures would normally cause a sharp increase in oil prices and a subsequent boost in safe-haven assets like Bitcoin.
The lack of response can be attributed to several factors, including the maturation of the crypto market and its reduced sensitivity to geopolitical events. Additionally, institutional flows into the market have become more structured and regulated, with investors now driven by product and gateway choices rather than panicking due to headlines.
The dollar's stability also played a role in this muted response, as it tends to strengthen when oil prices rise, counterbalancing any potential flight-to-quality bid for Bitcoin. Furthermore, the concentration of spot ETF holdings among funds that rebalance on calendars suggests that institutional investors are not panicking and selling their assets.
The market is waiting to see whether shipping lanes reopen within 48 hours, which has been the pattern in past Hormuz flare-ups. However, a sustained closure would likely disrupt global crude and LNG supplies, pushing inflation higher and forcing central banks to delay rate cuts, ultimately affecting long-duration assets like crypto.