After the US and Iran resumed direct fire, the capital markets were collectively under pressure, with Bitcoin hovering around $77,000.

Written by: ChandlerZ, Foresight News

On September 1, following the US announcement to expand its offensive against Iran, Bitcoin fell from a high of over $79,000 to about $77,200, with an intraday drop reaching 2.1% and briefly dipping below $76,500.

This decline occurred after a significant rebound in August, during which Bitcoin rose approximately 25%, marking the best August performance since 2017, and climbed from around $64,000 to over $81,000 in late August. ETF fund inflows and concentrated short covering had previously raised the coin's price, but after the US and Iran intensified their conflict, oil prices, the dollar, and US treasury yields all rose simultaneously, causing crypto assets to decline with tech stocks.

On September 1, the US Central Command announced that the US military completed a new round of strikes against targets of the Iranian Revolutionary Guard, which included air defense facilities, radar systems, maritime assets, mine-laying capabilities, and communication facilities. The US stated that the action was in response to recent Iranian attempts to attack commercial shipping and US military personnel in the Strait of Hormuz. AP reported that Iran subsequently launched missiles and drones at multiple locations in the region, with Donald Trump warning that Iran would face stronger retaliation if it continued its acts of revenge.

Prior to this round of airstrikes, the US and Iran had ended nearly a month of military silence on August 30, and two tankers departing from the Strait of Hormuz were subsequently attacked. The two sides had previously reached a temporary arrangement in June, but shipping through the strait has yet to return to normal. Before the war, the Strait of Hormuz accounted for about 20% of the world’s oil transportation, and Iran has effectively blockaded the strait for several months.

WTI closed at $90.22, rate hike probability rose to 66% within a week

On September 1, WTI crude oil rose by $4.46, up 5.2%, to close at $90.22 per barrel; Brent crude oil increased by $4.16, or 4.6%, to close at $94.65, both reaching their highest closing prices in five weeks. Following the US’s renewed strikes on Iran, traders again increased pricing for potential disruptions in Middle Eastern supply.

Before the outbreak of war, Brent crude was approximately $72 per barrel, and the September 1 closing price was about 31% higher than this level. Energy price increases have already entered the business cost structure. The International Air Transport Association expects that the average price of aviation fuel in 2026 will rise nearly 70% compared to 2025, with global airline fuel expenditures rising from $252 billion to about $350 billion. American Airlines disclosed that fuel and related taxes are expected to rise by $2.6 billion in the first half of 2026, an increase of 48.7%.

PVM analyst John Evans believes that the resumption of missile attacks between the US and Iran increases the likelihood of prolonged conflict. Analysts surveyed by Reuters in August forecast that shipping disruptions would keep oil prices above $80 per barrel in 2026. If tanker traffic through the Strait of Hormuz remains sluggish, refineries and shipping companies will still bear longer shipping routes, higher insurance costs, and delivery delays.

Energy prices have raised future inflation expectations, prompting US bond investors to demand higher yields. On September 1, the yield on the US 10-year Treasury bond rose to 4.792%, reaching 4.798% intraday, the highest level since January 2025. CME FedWatch indicated that traders expect a 66.2% probability that the Federal Reserve will raise rates by at least 25 basis points during the meeting on September 15 to 16, up from 39.6% a week prior.

Higher risk-free rates have depressed stock valuations, with the S&P 500 dropping 0.7% on September 1, the Dow Jones down 0.8%, the Nasdaq down 1%, and the Russell 2000 down 1.2%. The dollar strengthened in tandem, with spot gold briefly falling about 2.5% to around $4,330 per ounce. The pressure for rate hikes from rising oil prices outweighed safe-haven buying generated by geopolitical conflicts, and the opportunity cost of holding gold increased with rising US bond yields.

Bond sell-offs spread to Europe and Asia, with the UK 10-year bond yield briefly rising to 5.25%, Japan's 10-year bond yield hitting 3%, and European gas prices reaching a three-year high. Ole Hansen, head of commodity strategies at Saxo Bank, believes that short-term real interest rates and a rising dollar will continue to suppress gold, but persistent increases in energy and agricultural prices may push up inflation-hedging demand for gold over a longer cycle.

ETF funds continue to buy, bitcoin leverage positions remain moderate

Data from Farside Investors indicates that the US spot Bitcoin ETF saw a net inflow of $216.7 million on August 31, resuming the net inflow interrupted on the previous trading day. According to Glassnode, in the short squeeze window in late August, the US spot Bitcoin ETF had a cumulative net inflow of $2.23 billion.

The Ether spot ETF had a net inflow of $87.68 million on August 31, attracting capital for 11 consecutive trading days, with a total net inflow of about $1.6 billion during this period. According to Bitfinex, the capital demand for Ether funds relative to market size was about four times that of Bitcoin in the past week, as institutional funds continued to increase their exposure to crypto assets through regulated products before the escalation of the conflict.

The Bitfinex trading team stated that the recent increase was mainly driven by spot buying, with slowly increasing open interest in futures and relatively low premiums of futures compared to spot. Leveraged longs did not accumulate rapidly during the uptrend, so the pullback on September 1 did not trigger mass chain liquidations. Bitfinex has set $77,100 as short-term support, while Glassnode lists the $81,000 to $86,000 range as a concentrated selling zone.

As of August 31, open interest in Bitcoin futures remained below 700,000 BTC, lower than the phase peak of about 801,000 BTC on June 4; the 30-day implied volatility dropped below 40%. Deribit’s more actively traded put options were concentrated at strike prices of $70,000, $73,000, and $74,000, with some traders already buying downside protection for an escalation of the conflict or a Federal Reserve rate hike.

Wintermute focuses on $75,000, JPMorgan wary of stagflation risks

Wintermute OTC trader Jasper De Maere believes that under-invested investors are still buying on the pullback, and Bitcoin may continue to fluctuate prior to the Federal Reserve meeting in September, with $75,000 and $72,000 as support levels below, and selling pressure near $82,000. LMAX Group strategist Joel Kruger suggested that the simultaneous rise in oil prices, US treasury yields, and the dollar would limit Bitcoin’s short-term upward potential.

J.P. Morgan Asset Management's mid-year outlook predicts that prolonged obstacles in the Strait of Hormuz could push global economic risks toward stagflation, where inflation remains high and economic growth slows, thereby compressing the space for rate cuts in 2026.

The US is set to announce the August non-farm employment data on September 4, with market expectations of around 55,000 new jobs and an unemployment rate holding at 4.1%. Capital.com analyst Kyle Rodda indicated that if employment data comes in weaker than expected, the Federal Reserve would face greater resistance in raising rates during an economic slowdown. Following this, the interest rate decision on September 15 to 16 will directly update the funding costs for the dollar, US treasury yields, and Bitcoin.