Author: Wu Talks Blockchain

This edition of Wu Talks Space mainly focuses on "What the market is trading after the escalation of the US-Iran conflict", with participating guests including secondary researcher Minta, frontier technology investor Didier, and macro hedge fund PM Griffin Ardern. The discussion identified that the current market is shifting from "short-term geopolitical shocks" to "long-term conflict pricing": crude oil, shipping insurance, end consumer prices, and changes in certain central bank policies indicate that the war's impact is beginning to permeate global supply chains and inflation expectations. Based on this, the two guests judged that in the future, the more noteworthy focus is not on single safe-haven sentiments, but rather on the repricing of resources, capacity, and payment/transaction channels.

At the asset level, the discussion concentrated on several main lines: First is hard assets such as Bitcoin, gold, and copper, where Bitcoin is being reassessed by some funds as a "survival asset" in a war environment, but the short-term rise is still more driven by liquidity and speculation; second is the resource chains of copper, energy, mining, oil transportation, and shipping, where the core logic is that supply chain disruptions and rising transportation costs will elevate their strategic value; third is the AI industry chain, particularly in storage, electricity, and energy storage, as well as more expectation-differentiated Agent payments and agent transactions; fourth is commercial aerospace, drones, defense, and strategic metals, which are seen as direct beneficiaries of war spillover effects and industrial upgrade narratives. In trading terms, the overall strategy leans defensively: core positions can be maintained, but bearish options protection should be increased, reliance on USD single assets should be reduced, and attention should be moderately paid to currencies such as the Euro and Australian dollar.

The opinions expressed by the guests do not represent Wu Talks' views and do not constitute any investment advice; please strictly adhere to local laws and regulations.

The audio transcription was completed by GPT and may contain errors. Please listen to the complete podcast at Xiaoyuzhou.

Market Pricing and Crypto Asset Opportunities under the Escalation of the US-Iran Conflict

Minta: After entering the second half of the US-Iran conflict, the market briefly rebounded, but considering the situation, the conflict has not cooled down and still carries risks of escalation. The US continues to strike Iranian targets, while Iran retaliates with missiles and drones; Israel's air defense systems are under pressure, indicating that the impact of this conflict on the global landscape and risk assets is deepening. I would like to ask everyone to discuss: What exactly is the current market trading? Is this conflict merely a short-term disturbance, or is it beginning to be priced as a long-term risk?

Griffin Ardern: I believe the market is shifting from "short-term event trading" to "long-term conflict pricing". Taking crude oil as an example, the current price trend is no longer purely driven by the war itself, but rather a result of government intervention, real demand, and market games. Especially under inflation and political pressure, state power is becoming more deeply involved in pricing, which is a clear departure from a past market environment primarily dominated by traders, speculators, and the upstream and downstream of the industry chain.

This long-term characteristic is also reflected in shipping, insurance, and end consumer prices. Recently, shipping costs and insurance fees have been rising continuously, and commodities related to oil and trade routes have generally increased in price, signaling that the market has begun to view the conflict as a persistent risk rather than a short-term event. Central bank actions also reflect this, as inflation expectations are beginning to rise again.

The performance of the crypto market is more complex. Options and futures data indicate that institutions remain cautious about mid-term expectations for BTC and ETH, but prices are rising, which seems more like a result of liquidity redistribution. Due to traditional gold circulation and capital transfers being obstructed under the Middle East situation, crypto assets have become one of the few channels that can still flow across borders and are not easily regulated, thereby reinforcing the "funds channel" property of BTC and ETH.

A very apparent signal is that in the past, BTC typically had a higher forward premium compared to ETH, but in the current environment, the implied yield gap between the two has almost been erased. This indicates that what the market values more now is not the long-term narrative, but the short-term liquidity demand. In the medium term, this liquidity drive may still support crypto asset performance, but once capital withdrawal from the Middle East is completed, the market's subsequent outlook on crypto assets may not be so optimistic. This is the core pricing logic of the current crypto market.

The Limits of Oil Price Suppression and US Stagflation Risk

Minta: You just mentioned that both the Trump administration and Besant are sending signals to the market about "suppressing oil prices and controlling inflation". However, with signs of primary stagflation appearing in the US and continued obstacles in the Strait of Hormuz, to what extent can this policy truly suppress oil prices?

Griffin Ardern: I believe they can at most only delay the rise in oil prices, and it is very difficult to actually suppress them. What the US can do is merely release strategic petroleum reserves and increase domestic energy alternatives, but both paths have clear limitations. Strategic reserves are limited, while the cost of alternative sources like shale oil and heavy oil is higher, which ultimately still transmits to oil prices and inflation.

More critically, the market does not believe the US can restore navigation in the Strait of Hormuz in a short time. If the shipping route remains closed for a prolonged period and strategic reserves are gradually consumed, oil prices are likely to rise further when the market realizes "the cards are running out," even leading to a short squeeze-like trend. In other words, what Trump can do is more about buying time rather than reversing the trend.

What truly lies behind this pressure is not just crude oil itself, but the comprehensive rise in shipping, insurance, and supply chain costs. These additional costs will be transmitted layer by layer along the production, trade, and consumption chain, creating "pulse-like inflation" that continues to push overall prices upward.

A deeper issue is that the geopolitical situation may be changing the energy trade and currency settlement patterns. Once Gulf countries begin to reassess their safety and trading channels, the US dollar's advantage in international trade may be further weakened. This means that the US must face not only the rising energy costs but also the dual pressure from imported inflation and a weakening dollar.

Thus, for the US, there are currently almost no truly easy options: raising interest rates will hurt the economy and the financial system, while not raising rates may exacerbate inflation. Because of this, this round of oil price and inflation risks may be deeper and more prolonged than the market currently expects.

Segmented Pricing in Risk Markets and Phase-wise Benefits for Bitcoin

Minta: Under the current backdrop of the US-Iran war, how are risk markets trading and pricing?

Didier: Overall, I feel that the US stock market is still relatively optimistic and pricing seems more like betting on a quick resolution of the conflict, at least regarding easing the issues in the Strait of Hormuz. However, this does not fully align with what the predictive market indicates. If the conflict drags on for several months, the US stock market actually faces significant correction risks, so I believe it is necessary to allocate some put options while the market remains optimistic.

Conversely, the crypto market has actually benefited this time. The war in Iran has temporarily restored the narrative around Bitcoin. Some previous security events had temporarily undermined market confidence, but the war has led more people to realize that Bitcoin possesses greater portability and transferability than gold in extreme environments, which has pushed the market to reprice its "survival asset" attribute.

Moreover, the recent strength of Bitcoin has another important reason that has been overlooked, which is MicroStrategy making substantial buys. In the past two weeks, it has acquired about 40,000 Bitcoins, and its financing structure has changed: it is no longer primarily relying on selling stock, but is instead raising funds through issuing high-yield perpetual bonds, significantly reducing equity dilution pressure. This indicates that the financing path it envisioned a year ago is now starting to work effectively.

Additionally, coupled with continued net inflows into ETFs and large on-chain investors continuing to accumulate, Bitcoin’s recent rise is not solely driven by geopolitical conflicts but is the result of narrative restoration, institutional buying, and capital inflows.

Therefore, my overall judgment is that the traditional risk market, especially US stocks, is currently somewhat overly optimistic; while the crypto market has unexpectedly benefited from this wave of conflict and performed even stronger.

Griffin Ardern: The current optimistic sentiment in the US stock market indeed brings some liquidity to the crypto market, but this is more short-term funding, not long-term allocation money. The recent rise in crypto is, on one hand, benefiting from the "survival asset" narrative, and on the other hand, has absorbed some liquidity that spilled over from the US stock market, but investors' long-term expectations have not actually improved, so there is an opportunity in the short term, but long-term risks remain.

Additionally, the current rising demand for perpetual bonds fundamentally reflects deepening investor concerns about US inflation and sovereign debt risks. Whether it's short-duration US bonds or long-duration US bonds, yields are rising, indicating that the market's risk appetite for dollar assets is increasing. In this context, capital is starting to flow more towards high-yield, fundamentally strong corporate bonds.

Once Bitcoin is reassigned a certain "survival asset" property, investors are also more willing to hold bonds linked to Bitcoin that can also provide yields, rather than just holding US Treasury bonds. This indicates that the market is gradually shifting from traditional Treasury credit to a credit system more inclined towards commodity-backed and real asset-supported systems. Within this framework, Bitcoin is also beginning to be viewed as a special type of collateral.

This is why, on one hand, high-quality corporate bonds are favored, while on the other, perpetual bonds based on Bitcoin logic, like MSTR, are also gaining increasing popularity. What the market truly desires are assets that can both distance themselves from dollar risk and provide stable yields.

Medium to Long-Term Allocation Direction: Gold, Silver, Copper, BTC Revaluation, AI Chain and Oil Transportation as New Opportunities

Minta: Following this logic, other than the directions just mentioned, what other assets do you think are suitable for medium to long-term allocation? I think of gold mines. If oil prices and geopolitical situations remain uncertain, capital may continue to flow into hard assets, and gold mines offer more elasticity compared to gold itself. Besides that, what other assets are worth medium to long-term consideration?

Didier: I still have faith in Bitcoin. Although several previous events have temporarily impacted market confidence, it will ultimately return to its original logic. Looking at the next few years, I believe both Bitcoin and gold still have the potential to set new highs. Silver has more elasticity but also carries stronger speculative attributes, and its future trends will still depend on whether gold can continue to rise significantly.

If the situation worsens further, such as the Strait of Hormuz being unable to resume navigation for a long time, Bitcoin may not be ruled out from experiencing another drop, providing a new low-buy opportunity for the market. However, from a medium to long-term view, I believe it is already close to the bottom.

Additionally, I am very focused on the AI industry chain. As the core targets like Nvidia begin to plateau in growth, the market is already expanding towards storage, optical communication, electricity, and even spilling over to Japanese and Korean companies. In this context, Circle has also gradually been incorporated into the AI industry chain's end, particularly the narrative around agent payments is making it relatively resilient in the current phase.

On a further note, with the development of agent payments and agent transactions, the demand for blockchain and cryptocurrencies will actually be strengthened. Because in the future, payments, transfers, and transactions between machines are likely to naturally be more suitable for completion based on stablecoins and on-chain systems. Therefore, the stablecoin sector is, in my view, a strong medium to long-term direction, with Circle as one of the few tradable subjects worth focusing on.

Moreover, oil transportation is also a noteworthy direction. It benefits in the short term from the blockage of the Strait of Hormuz, but the medium to long-term logic is that if certain sanctioned countries return to formal shipping systems, the formal market prices may also be supported. Thus, capacity-related assets are also worth paying attention to as one line.

Minta: Currently, the US stock market is trading AI CAPEX mainly revolving around storage, optical modules, CPUs, etc. What stage do you think trends like silicon photonics have reached now? Also, will the US-Iran war influence the timing of the speculation in these tracks?

Didier: I think the more certain direction now remains storage and electricity.

Let's talk about electricity first. There are currently several paths, including miners shifting to AIDC, nuclear energy, as well as solar and energy storage. Among them, uranium corresponding to nuclear power deserves attention, especially if future relations between Russia and the US do not ease, the Western system may face a shortage of uranium supply, which will bring new opportunities. Overall, the issue of electricity actually reflects the structural opportunities brought by the parallel existence of two supply chain systems.

In terms of storage, I still believe it is one of the hardest directions in the AI industry chain; that bottleneck will be difficult to resolve quickly over the next two or three years. Although companies like Micron and SanDisk have already fully engaged in competition, funds are starting to shift towards relatively lower-valued Japanese and Korean storage companies, such as Samsung, SK Hynix, and Kioxia. Overall, storage will still be one of the strongest sectors this year.

Compared to that, the logic of optical modules and silicon photonics is somewhat more complex. On one hand, there has always been a debate in the market about whether to scale up or scale out; on the other hand, the divergence on the technology path "light or copper" also persists. Thus, optical communication remains a major theme, but it is not as certain as storage.

If we are to find genuine expectation differences within the AI industry chain, I would instead feel that agent payments and agent transactions are more deserving of attention. Circle has already emerged as the first relatively clear subject, but the market’s awareness of this line has yet to fully unfold, and many people have not truly boarded yet. As for agent transactions, although there aren't many clear targets yet, platforms like Futu and Robinhood are most likely to move in this direction in the future.

So my perspective is that storage and electricity are the relatively certain main lines now; while agent payments and agent transactions present a greater expectation difference with fewer participants.

Griffin Ardern: I would like to add a deeper level of direction, which is copper.

Because whether it's AI, electricity construction, or storage and chips, they fundamentally all rely on copper. Currently, the supply and transportation of copper are both simultaneously impacted by the reconstruction of supply chains. The supply side focuses mainly on Chile and Africa, while the transportation side is facing significant cost increases due to blockages in the Red Sea and detours around the Cape of Good Hope.

At the same time, the demand side is simultaneously strengthening: the electricity construction driven by AI requires copper, the storage and electronics industries need copper, and the US strategic reserves are also increasing the demand for copper. In other words, copper is now facing multiple driving forces: limited supply, rising transportation costs, and increasing demand.

So I believe that the market may actually be underestimating the medium to long-term demand for copper. Whether it's allocating to resource-based markets like Chile or directly focusing on copper mining companies and related stocks, these are all directions worth considering.

More broadly, as long as key shipping lanes in the Middle East remain blocked, the logic of regionalizing supply chains and rising transportation costs will continue to strengthen, leading to potential repricing of resource assets such as energy, metals, and precious metals.

From a dollar-denominated perspective, copper is particularly a relative undervalued direction worth paying attention to.

Direct Beneficiary Directions under the US-Iran Conflict: Military Industry, Shipping, and Resource Channels

Minta: If we look at directions that directly benefit from the conflict, such as oil transportation, drones, military industry, domestic resource chains, and even commercial aerospace, which tracks do you think are more worth关注?

Didier: I think commercial aerospace is definitely a major direction, even an AI-like dimensional upgrade opportunity. As core companies like SpaceX advance capitalization, the entire sector is likely to enter a stage of continuous expansion, becoming an important scene for the landing of many new technologies.

Drones have also been reaffirmed as an important direction in this round of conflict. They have become a core part of modern offense and defense systems, and the real future evolution direction is likely to be AI-driven drone swarm collaboration. Therefore, looking at it in the long-term, drones and AI are deeply linked.

Additionally, this war has once again highlighted the rapidly rising importance of AI intelligence analysis and satellite monitoring, thus the integration between military industry, AI, and space infrastructure will continue to tighten.

As for strategic metals and minor metals, I also believe they will become increasingly important. This is because whether it is optical modules, aviation engines, or high-end manufacturing, many critical materials have centralized supply, quota restrictions, and geopolitical risks. Once supply is restricted, price increases and supply chain reconstruction will occur simultaneously.

Thus, overall, the directions that directly benefit from the conflict are primarily commercial aerospace, drones, and key strategic metals. Behind these tracks are strong long-term logics.

Griffin Ardern: Besides resources and energy, I believe shipping is also a very important direction.

This conflict has made the market重新意识到, during wartime simply having capital is not enough; the key is whether resources can be circulated safely. Therefore, those who can ensure safe resource trading and transport are more valuable. Recently, capital is flowing back to traditional commodity nodes like Geneva, Singapore, and Hong Kong, indicating that the market is reevaluating supply chain security.

In this context, the importance of shipping companies has clearly risen. Especially large shipping companies capable of steadily operating along alternative routes like the Cape of Good Hope deserve close attention. Because what will truly become scarce in the future is not just resources themselves, but the capability to safely transport these resources.

Additionally, as the collateral and payment attributes of commodities strengthen, mining companies that possess spot resources will also see their asset values reassessed. If these mining companies can build a more closely integrated and secure trading channel with the shipping system, then such companies are also worthy of attention.

Position Timing and Defensive Thinking amid Market Divergence at High Levels

Minta: Combining the previous analysis and returning to trading nodes and timing, how would you handle different positions now, such as Beta and Alpha positions?

Didier: I believe that overall it should still be somewhat defensive now, as the market sentiment is generally optimistic; this is precisely when protective positions need to be retained.

However, core positions do not need to be adjusted easily, and I believe sectors like storage, electricity, and BTC should still be held. Because after this round of market adjustment, the bottom is not too far off. On the contrary, those directions that have dropped significantly and have repair space are worth gradually moving into; while those that have risen substantially can consider making some adjustments.

For long-term Alpha opportunities I’m optimistic about, I won’t be too fixated on short-term timing; the core is still to hold. But in the current environment where fluctuations could be quite large both up and down, offensive positions indeed need to be more flexible; switching to lower positions with greater expectation differences can be done while using bearish options for combination protection.

Griffin Ardern: I suggest that now might be a good time to allocate some low-cost puts. Because you don’t know when a big drop will come, but it’s likely that at some point in the future it will occur, so you can use carry strategies to average costs and build protective positions in advance.

The core reason is that the current market rise relies more on short-term liquidity support, which is not stable in the medium to long term. With the gradual transmission of geopolitical conflicts, inflation pressures, and changes in policies around the world, market expectations for future interest rates are actually rising, and high rates are very likely to become the norm in the next few years, which could itself become a key variable putting pressure on risk assets.

Additionally, from the perspective of capital allocation, it is not advisable to hold only USD. The current strength of the dollar is primarily driven by safe-haven assets, but if the market begins to reprice the dollar's purchasing power, particularly in terms of resources and trade, the dollar may not be able to maintain its current strength.

Therefore, I would consider doing some currency diversified allocations, such as increasing exposure to the Euro and Australian dollar as resource country currencies. As resource countries themselves benefit from rising commodity prices, and places like Australia, which have resource attributes and relatively stable policies, their related currencies and assets may perform better.

Overall, not only should positions be defensive now, but diversifying cash and currency levels is also necessary.

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