How will the Houthis joining the war and supporting Iran impact BTC? The Houthis have publicly announced that they are fully prepared militarily and could strike or effectively blockade the Bab al-Mandeb Strait at any time to show support for Iran. Between 2023 and 2025, the Houthis used drones, missiles, and speedboats to attack hundreds of ships, causing Red Sea shipping volumes to plummet by 90%. Most shipping companies were forced to reroute around Africa's Cape of Good Hope (adding 2 weeks of travel time, along with increased fuel and insurance costs). More importantly, the impact on oil isn’t just a matter of market sentiment—it directly compresses the actual transportation capacity of Middle Eastern crude oil. Under the already tense situation in the Strait of Hormuz, Saudi Arabia and some Gulf countries have been relying on pipelines to transport crude oil to Red Sea ports and export it from there, bypassing Hormuz. But if the Houthis simultaneously threaten the Bab al-Mandeb Strait, it essentially renders this backup export route ineffective. In this case, the market’s concern shifts from oil tankers taking longer routes to whether Middle Eastern crude can even be delivered smoothly to Europe and Asia. The geopolitical premium in oil prices will continue to rise and may gradually turn into a real supply shock. Once oil prices continue to climb, the most direct impact will be on U.S. inflation. Gasoline and diesel prices will inevitably rise, followed by increased costs in transportation, aviation, chemicals, agriculture, and food. Inflation expectations will also surge. The longer oil prices remain high, the harder it will be for the Federal Reserve to cut interest rates, and the market will start worrying about inflation making a comeback. Currently, prediction markets have significantly increased the probability of the Fed raising rates in 2026. This is the bigger pressure on U.S. stocks and Bitcoin.