Bitcoin Flags Shift to Risk-Off

Key Points

• Brent Crude falls below $75 per barrel as the Strait of Hormuz gradually reopens.
• However, crude oil reserves continue to decline.
• Bitcoin is testing primary support, and stocks are weakening.
• The Dollar is stronger, while Gold is testing primary support at $4,000 per ounce.

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Brent Crude futures (Aug’26) fell below $75 per barrel on reports of increased traffic through the Strait of Hormuz.

From HFI Research:

The market is pricing a clean reopening, right on schedule. I am not convinced…

A reopening is neither as close nor as clean as the market would have us believe. Tankers have to start entering the Gulf for shut-in wells to be brought back on production. Minesweeping alone takes weeks after any ceasefire, redirected tankers need 30 to 40 days to reposition, and Tehran can keep the mere threat of attack alive to throttle passage at will.

US Strategic Petroleum Reserves continue to decline at the rate of 9 million barrels a week, falling to 331 million barrels on June 19.

The ceasefire remains tenuous, with hostilities between Israel and Hezbollah in Lebanon a potential flashpoint. From Reuters:

In Washington, Lebanon and Israel discussed a U.S.-backed proposal for Israel’s forces to pull out of ⁠some territory it ​invaded to be handed back to Lebanese army control. But Israeli Prime Minister Benjamin Netanyahu said Israel would not pull troops out.

…At home, the reckoning is equally stark, said former U.S. official Dennis Ross. Netanyahu is increasingly boxed in between a U.S. president intent on ending the conflict and a domestic base resistant to ​concessions, particularly in Lebanon, he said. Withdrawal risks political backlash while escalation risks confrontation with Washington.

Bitcoin¹ continues to test primary support at 60,000. A breach would warn of another decline, signaling a hard swing in financial markets away from risk assets.

The S&P 500 is in its fourth week of a mild sell-off, with declining Trend Index peaks indicating secondary selling pressure. A retracement to test support at 7000 is likely.

10-year Treasury yields are retracing for another test of support at 4.25% as lower oil prices ease inflation fears.

Dollar & Gold

The Dollar is strengthening in expectation of higher short-term interest rates, but new Fed Chair Kevin Warsh has yet to reveal his hand.

Gold is testing primary support at $4,000 per ounce as the Dollar strengthens.

Copper & Lithium

Energy metals are also experiencing a sell-off, with Copper and Lithium most prominent.

Sprott Copper Miners ETF² (COPP) is headed for a test of primary support at 32, while Trend Index peaks below zero warn of long-term selling pressure.

Sprott Lithium Miners ETF² (LITP) is testing secondary support at 13. Declining Trend Index peaks warn of growing selling pressure, and a breach of support will likely test the primary level at 11.

Conclusion

The Dollar is strengthening amid expectations of higher short-term interest rates under the new Fed Chair, Kevin Warsh. But Warsh has yet to reveal his hand, and long-term Treasury yields are softening as fears of high inflation from spiking energy prices fade.

The ceasefire in the Persian Gulf is tenuous and could easily be disrupted by a flare-up of hostilities between Israel and Hezbollah in Lebanon. Stability in the region is even further out of reach than it was before 28 February and will likely remain so. States will likely build up larger strategic reserves and develop strategies to reduce their exposure to another closure of the Strait of Hormuz. This includes encouraging the use of electric vehicles and nuclear energy, two industries that we expect to be long-term beneficiaries from the conflict.

The biggest losers will likely be the Gulf States and Israel. The Gulf States have suffered an enormous setback in their ability to project themselves as a stable financial and industrial hub for future development. They will fall under Iran’s shadow, which will be able to exert far greater political sway in the region. Israel is also likely to suffer under whatever peace deal President Trump negotiates, with a financially stronger Iran able to extend its influence in the region and unlikely to be deterred from its long-term aims of regional hegemony.

Gold and commodities are falling as the Dollar strengthens, but we are convinced that this runs counter to the secular trend, which will likely last for decades. Increased fiscal spending and growing deficits will accelerate the debasement of the Dollar and other fiat currencies, with central banks continuing their shift to Gold bullion as the primary reserve asset.

Acknowledgments

• CoinDesk: Bitcoin
• Federal Reserve of St Louis: FRED Data
• CNBC: Brent Crude ICE Aug’26 Futures
• Reuters: US-Iran deal may leave Netanyahu as biggest casualty
• Reuters: Trump, Republican senator engage in shouting match over Iran war
• HFI Research: Parex Resources, High Torque Oil Leverage At A Double-Digit Yield

Notes

1. Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
2. We analyze exchange-traded funds (ETFs) to determine market sentiment towards a specific sector, industry, or commodity. The analysis is not a recommendation to buy or sell, nor is it a commentary on the merits of the particular ETF.