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9/21/20265 min read
Why did a trade meeting turn into a meeting about Iran?
China's role in the Gulf has shifted over the past week. Saudi Arabia has asked Beijing for help in dealing with the Houthi rebels, and China has secretly urged Tehran to use its influence to restrain the Yemeni-based militant group, according to a Reuters report on September 17 citing three Iranian sources. The Iranian-backed Houthi forces said they attacked sensitive sites in Riyadh on Saturday with missiles and drones, and also struck an Aramco facility at the Yanbu export hub on the Red Sea.
Mark Pfeifle, a Republican strategist and former White House national security official, told Al Jazeera that Saudi Arabia's request marks the first time China has truly intervened directly. China has long been the largest buyer of Iranian crude oil, giving Beijing leverage over Tehran that Washington lacks.
Iran has also made a move. Security chief Mohsen Rezaei told Al Jazeera on Saturday that Tehran had conveyed its conditions for ending the war to Washington through Qatari mediators. Those terms included ending the war on all fronts, freeing up Iranian funds, and lifting the U.S. naval blockade.
With the UN General Assembly week underway and oil shipments through the Strait of Hormuz recovering to an average of 2.9 million barrels per day, up from 700,000 barrels in August, traders see a diplomatic opportunity. However, oil shipments remain significantly lower than pre-conflict levels, which is why Brent crude prices are still hovering near $100.
Increases when escalating, decreases when escalating.
The Iranian conflict clearly demonstrated how Bitcoin fluctuates around geopolitical events, and this doesn't align with the narrative surrounding digital gold.
In early April, when Trump set a deadline for Iran to reopen the Strait of Hormuz and warned that "an entire civilization will perish tonight," Brent crude oil traded above $110 and Bitcoin and Ether fell below their recent highs as risk assets fluctuated. When reports of a possible last-minute breakthrough emerged on April 7th, oil prices plummeted and Bitcoin recovered to near $70,000.
On June 15, after Trump announced a peace deal that would lift the US naval blockade and reopen the strait, crude oil prices fell 5% to around $80, about a third of their early March high of $120. Global stock markets rose and Bitcoin gained about 2.7%. That ceasefire then collapsed, and oil prices have since rebounded to near $100.
Over the weekend of September 19th and 20th, when Houthi forces attacked Riyadh and Yanbu, the cryptocurrency market declined. By Monday, as hopes for diplomacy revived, Bitcoin rose along with the stock market and inversely with oil prices. In each of those periods, Bitcoin moved in the same direction as the stock market and inversely to crude oil prices. An asset that acts as a geopolitical hedge will do the opposite, rising when conflict escalates and oil prices surge.
The transmission channel operates through interest rates.
The reason Bitcoin trades this way is because the Iran conflict primarily impacts it through inflation and interest rates, rather than through safe-haven flows.
An oil shock increases energy costs, leading to inflation, and this pushes central banks toward tighter policies. Tighter policies increase cash and bond yields, while reducing the liquidity that speculative and non-yielding assets depend on. The Federal Reserve raised interest rates last week for the first time since 2023, a decision made as Brent crude oil prices neared $100 and Bitcoin briefly dropped below $76,000 as expectations of further rate hikes increased.
That sequence of events clarifies the issue. When oil prices fall due to diplomatic negotiations, inflation expectations decrease, interest rate expectations fall, and risky assets, including Bitcoin, all rise. When oil prices surge due to escalating conflict, the same sequence of events occurs in the opposite direction.
This aligns with the macroeconomic framework that Matthew Sigel of VanEck put forward in August, when he argued that Bitcoin's price surge was due to the U.S. Treasury's expansion of its long-term bond-buying program, rather than specific cryptocurrency news. In both cases, the asset reacts to the liquidity and interest rate environment, and geopolitical factors influence the extent to which it impacts that environment.
The May summit set a warning precedent.
The market experienced a similar situation this year. Trump and Xi Jinping met in Beijing on May 14th and 15th. Afterward, Trump told reporters that both he and Xi wanted to end the conflict in Iran and that Iran did not possess nuclear weapons, but Wall Street saw a less than favorable outcome. Global stocks plummeted the following morning, with the KOSPI index falling more than 6%, and the order for 200 Boeing aircraft was significantly lower than the 500 that White House sources had previously predicted.
That event serves as a reminder that pre-prioritizing a summit carries its own risks. Monday's rally reflected expectations of progress on the Iran issue. If Thursday had only seen statements of general intent rather than concrete commitments from Beijing to pressure Tehran, the rally built on those expectations could have reversed quickly, and based on this year's evidence, Bitcoin would have reversed accordingly.
Assessment and Conclusion
One of the conditions Iran has set, the release of its frozen funds, relates to a part of the financial system that the cryptocurrency market has been closely watching this year. Operation Economic Fury froze approximately 475 million USDT linked to Iran in 2026, including 131 million USD in four Tron wallets linked to Iran's central bank in July, with Tether implementing the freeze at the smart contract level after being designated by OFAC.
There are currently no reports indicating that Iran's demands extend to frozen stablecoin balances, and any diplomatic solution would most likely address reserves held conventionally first. But this question highlights how the current enforcement of sanctions includes both on-chain assets and bank accounts, and that ending the conflict through negotiations may ultimately require decisions regarding assets located on public blockchains under the control of a private stablecoin issuer. For Bitcoin prices this week, the relevant variable is simpler: whether Thursday's meeting will bring down or keep oil prices stable.
Disclaimer: The content in this article is for informational, research, data analysis, and reference purposes only regarding the cryptocurrency market. All opinions, assessments, forecasts, or opinions reflect the author's perspective at the time of publication and do not constitute investment advice, solicitations for buying or selling, trading recommendations, advertising, marketing, or promotion of any financial products, services, or cryptocurrencies. Mentions of projects, tokens, protocols, exchanges, wallets, or cryptocurrency service providers (CASPs) are for research, analysis, or informational purposes only and should not be construed as endorsements, recommendations, or guarantees in any way. HCCVenture does not broker, advertise, market, promote, or connect users in Vietnam with any cryptocurrency services from CASPs. HCCVenture does not accept asset custody, investment mandates, manage assets, or execute transactions on behalf of clients. All investment decisions are made entirely through the reader's own research (DYOR), evaluation, and responsibility; HCCVenture is not liable for any losses or damages arising from the use of or reliance on the information presented in this article.
Compiled and analyzed by HCCVenture
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