The war in Iran is entering its 18th day and the conflict has now spilled over to neighbouring countries in the Gulf, affecting civilian and economic infrastructure. Yesterday, an Iranian drone struck Dubai International Airport, the world’s busiest aviation hub, igniting a fuel tank and suspending air traffic to and from the region. Other instances include a fatal missile strike in Abu Dhabi and attacks on key energy infrastructure facilities such as the Shah gas field. Markets, by all traditional logic, should have panicked in response to this escalation. Instead, Bitcoin did the opposite by breaking above $75K for the first time since February 4 with short liquidations reaching $416.62 million.
The explanation lies in plain sight. US Treasury Secretary Scott Bessent told CNBC that the U.S. is allowing Iranian oil tankers to pass through the Strait of Hormuz. This was the first indication of an ease in the blockade that has caused a severe strain on global energy supplies since early March. In effect, what we are seeing today is that while the war might have escalated militarily, it is seemingly de-escalating economically. Bitcoin is benefitting from this as the only major asset class that trades 24/7 while processing both these realities in real time.
Dubai, Abu Dhabi, Shah Field: The War Expands Beyond Iran
The conflict in the Middle East is now clearly no longer constrained within Iran’s borders. Yesterday’s events highlighted once again the fragility of this war escalating to a larger scale regional conflict. The Washington Post reported that an Iranian drone had struck a fuel tank near Dubai International Airport, prompting flights to be suspended before they were gradually resumed later in the day. On the same day, Abu Dhabi saw two attacks with a fatal missile strike that hit a civilian car and a drone attack on the Shah natural gas facility, one of UAE’s most important energy infrastructure hubs.
What’s particularly precarious about this situation is the global hesitation to contain the escalations we’re seeing. European allies have restrained from expanding naval operations around the Strait of Hormuz despite pressure from President Donald Trump. At the same time, an information war is playing out, with Trump accusing Iran of spreading disinformation through AI to twist narratives around battlefield gains. However, the most critical signal continues to come from the energy markets. The International Energy Agency has put out a dangerous reminder that this conflict has already led to one of the largest supply disruptions in the history of the global oil market.
The Hormuz Crack: Bessent’s Quiet De-Escalation Signal
Despite military hostilities escalating across the region, first signs of a de-escalation around the Strait of Hormuz and global energy markets. In a CNBC interview, Treasury Secretary Scott Bessent stated that Iranian oil tankers are already moving through the strait. He added that this was a “natural opening” that the U.S. is willing to look past for now to keep the energy markets in check. What’s critical here is not just the statement, but the implication. Indian and Chinese oil tankers have already passed through the region, indicating that the blockade is no longer absolute.
Oil prices have reacted quickly on the backdrop of this news. Brent, which hit a peak of $119.9 per barrel on March 9, has pulled back to around $103, with WTI hovering around the mid $90s. Future projections are also suggesting that markets might be pricing in post-crisis normalization. The EIA sees Brent staying above $95 in the short term but a decline to below the $80 mark by Q3 and toward close to $70 by the end of the year.
As the war has expanded geographically, the actual supply uncertainty seems to be easing. If oil continues to decline below the $100 level, the fears around the stagflation narrative that has restricted risk assets begins to ease. This ultimately influences the path to potential future rate cuts which is structurally bullish for BTC and would likely ignite the risk-on trade.
Bitcoin Breaks $75K: 416 Million in Shorts Liquidated as the Market Flips
Bitcoin’s reaction to this shifting macro backdrop has been anything but subtle. BTC broke above the $75K mark for the first time since the war began, reaching a high of $76K, a level not seen in over 40 days. What followed was a classic short squeeze. Data from CoinGlass shows that total liquidations reached more than $540 million yesterday with $416.62 million accounting for short positions. At the same time, Open Interest saw a $3.3 billion jump from $47.9 billion to $51.3 billion showing that fresh leveraged positions were entering the market and marking a structural shift in positioning.
The move from a technical perspective is also very significant. Bitcoin closed yesterday above the $74K level, a price point that it failed to get passed multiple times over the past two weeks. Once this level gave way, shorts were squeezed and pushed prices in a reflexive loop. There is also a visible shift in momentum when it comes to institutional demand. March has already seen $1.54 billion in cumulative inflows, a massive contrast to February and January that saw outflows of -$206.52 and -$1.61 billion respectively. At the time of writing, Bitcoin is up over 12% since the conflict began on February 28, outpacing traditional markets worldwide and traditional safe haven assets like gold.
What to Watch: The FOMC Wildcard and the March 19-20 Window
This week is set to be another volatile one for BTC, with the most important event taking place tomorrow. The U.S. interest decision, the updated dot plot and the subsequent press conference will likely influence Bitcoin’s short term direction. While the rate decision is almost certainly leaning toward a pause, with the CME FedWatch tool placing the probability at 99%, traders and investors will be looking at the dot plot for hints on future rate decisions. This will be the first projection from the Fed that incorporates both the oil shock and the macro environment.
If the projections shift from 1-2 rate cuts this year to no cuts, this will likely trigger a risk off move given that it signals a higher-for-longer narrative in effect. Instead, if expectations are maintained, the dovish Fed combined with the possibility of oil prices coming down could push Bitcoin higher.
Another point to note is that Bitcoin’s volatility around previous FOMC meetings have lingered for roughly 48 hours during which a local bottom is formed. Therefore, this event might create a dip window before the next move. While the markets wait for the data to come in, more clarity around shipments passing through the Strait of Hormuz will likely push oil prices down. This, in turn, could calm stagflation fears and bring the potential of future cuts back into focus.
Source: https://www.cryptopolitan.com/iran-strikes-dubai-bitcoin-breaks-75k/