Bitcoin surged 6% in two days thanks to diplomatic developments between the US and Iran
US envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi held a meeting lasting approximately three hours on the sidelines of the United Nations General Assembly, with the assistance of Qatari diplomats.
9/23/20264 min read
The diplomatic situation is as unstable as price fluctuations.
Markets fluctuated based on a proposal that Tehran partially denied. Senior Iranian officials told Reuters and Japan's Kyodo news agency that Iran had passed a proposal through mediators to reopen the Strait of Hormuz within seven days if Washington eased military pressure and lifted its blockade of Iranian ports, a proposal reportedly approved by the Supreme Leader and the National Security Council. Iranian state media subsequently denied this. Al Jazeera reported that Iran would only consider negotiations if the United States met its conditions and provided its guarantees.
The conditions, reportedly from Iranian sources, extend beyond just the Hormuz issue: an end to the war on all fronts, a timetable for the complete withdrawal of Israeli troops from southern Lebanon, the release of frozen funds, the lifting of the naval blockade and new sanctions, an end to military threats, and an exemption from oil taxes.
Secretary of State Marco Rubio said the United States is ready to engage in dialogue with Iran at the UN General Assembly, especially if there is a prospect of a positive outcome. A senior Iranian official rejected the possibility of a face-to-face meeting between Trump and President Masoud Pezeshkian, stating that the Iranian delegation has the full right to resume negotiations. Trump told the UN General Assembly that he is close to deciding whether to destroy Iran or reach an agreement. No further meetings have been scheduled. What the markets are reflecting is the resumption of contact, not an agreement.
The correlation is now clear.
Two days ago, the crucial question was whether Bitcoin acts as a geopolitical hedge or a risky asset. Data from 2026 answered that question, and this week added another piece of data in the same direction.
In late March, Bitcoin rose along with the stock market while oil prices fell after Trump announced that negotiations with Iran had begun. On April 8, a two-week ceasefire agreement with the intention of reopening the Strait of Hormuz pushed Bitcoin above $70,000. On June 15, the announcement of a peace agreement caused crude oil prices to drop 5% to around $80 and Bitcoin to rise 2.7%.
The opposite has also occurred consistently. On September 1st and 2nd, new US attacks pushed Brent crude oil prices above $93 and Bitcoin below $76,500, with 10-year Treasury yields rising to nearly 4.8%. On September 7th, after the Central Command attacked three Iranian oil tankers near Kharg Island, Jask, and the Gulf of Oman, oil prices surged more than 6% for the month, and Bitcoin fell to around $79,700.
Each development points to the same trend. Bitcoin rises when oil prices fall and the stock market rises, and falls when oil prices surge. Gold is also noteworthy because it doesn't function as a safe-haven asset. It fell about 0.8% during the early September surge and held steady during this week's decline. Both assets are traded based on liquidity conditions rather than crisis demand.
Why is petroleum a transmission channel?
This mechanism operates through inflation and interest rates, not through safe-haven flows. The Strait of Hormuz once transported about one-fifth of the world's oil and liquefied natural gas before the war began in late February with the US and Israeli attacks in Operation Epic Fury. Restricting passage through the strait increases energy prices, thereby fueling overall inflation, which in turn complicates matters for central banks. Federal Reserve Chairman Kevin Warsh has maintained a hawkish stance throughout this period, and the Fed raised interest rates last week for the first time since 2023.
Higher interest rates increase returns on cash and draw liquidity away from non-yielding assets. That's why the price of a barrel of crude oil can impact Bitcoin. The spot Bitcoin ETFs approved in January 2024 reinforced that link by including Bitcoin in the same capital allocation decisions that govern stocks and bonds.
Each dollar drop in oil prices reduces inflation expectations, softens the path of interest rates, and supports riskier assets. A sustained reopening of the Strait of Hormuz would have a more positive impact on Bitcoin through the interest rate channel than any specific cryptocurrency-related developments currently being planned.
Assessment and conclusions
The options market is leaning toward a bullish trend amid diplomatic developments. Approximately $1.81 billion in Bitcoin and Ether options will expire on Friday, with both put-call ratios below 1, and call options volume dominating over the past 24 hours. Open Bitcoin call options are concentrated at strike prices of $90,000 and $100,000, while Ether options are concentrated between $3,000 and $4,000. Last week saw the largest options expiration ever for BlackRock's IBIT fund.
This position creates an asymmetry. Confirmation of the reopening of the Strait of Hormuz would push oil prices even lower, to pre-February levels, easing interest rate pressures and confirming call options currently concentrated at prices higher than the current price. A breakdown in negotiations, or a sustained denial from Iran, would render those positions unfavorable when they expire on Friday.
The Fear and Greed Index, at 71, has fallen from 78 despite the price surge, suggesting some underlying psychological adjustment. Several factors could still disrupt the trade. No follow-up meeting has been scheduled. Iranian state media has once again contradicted its own officials this week. Mr. Trump said he only expects a deal after the November 3 midterm elections, which is still six weeks away. And Saudi Arabia is being drawn deeper into the conflict, with Houthi forces advancing in Yemen and attacking Riyadh and the Aramco facility at Yanbu over the weekend, a front that could again raise the risk premium regardless of what happens in the Strait of Hormuz.
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Compiled and analyzed by HCCVenture
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