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Executive Summary:

On March 9, 2026, geopolitical tensions escalated sharply after Iran's Assembly of Experts named Mojtaba Khamenei - son of the recently assassinated Supreme Leader - as the new hardline leader, prompting a major risk-off move in markets. Brent Crude surged past $110 (peaking at $119) due to Middle East production cuts and the effective closure of the Strait of Hormuz, though it pulled back toward $107 amid reports of potential G7 strategic reserve releases; prolonged disruption would sustain elevated oil prices and inflation.

The Dollar Index rose, U.S. yields climbed (10Y near 4.20%), equities sold off (Russell 2000 hit hardest), and Fed rate-cut expectations for 2026 dropped to roughly one cut. Bitcoin held up better than stocks, remaining range-bound between roughly $65k–$74k with limited near-term upside momentum amid tighter conditions and war risks. Cryptonary maintains our cautious stance: the conflict is unlikely to resolve quickly (base case: 3–4+ weeks), supporting high oil/inflation, delayed rate cuts, and pressure on equities, while reinforcing our longer-term view that Bitcoin will bottom between $50k–$63k in the coming months.

On Sunday, Iran's Assembly of Experts voted Mojtaba Khamenei as its new Supreme Leader in a decisive vote. Mojtaba is the son of the recently killed (by an Israeli and US missile strike) Supreme Leader Ali Khamenei, and he is seen as an Islamic 'hardliner' who has strong ties to the IRGC, and he was not 'approved' by President Trump. This is therefore an escalation in the conflict as it signals that the Iranians aren't willing to back down.

Oil Surges North of $110

On Sunday night, the futures open saw Brent Crude Oil open at $108 per barrel, with prices reaching as high as $119 (currently trading at $107 pre-market). This is the first time since early-March 2022 that Brent Crude has gone north of $100/barrel.

Brent Crude Oil 1D Chart

This follows major producers in the Middle East, curbing output either through fear of being targeted by a strike, or through reaching full capacity storages (and not being able to export due to the Strait of Hormuz effectively being shut.

However, Brent Crude has pulled back from its $119 high overnight to now $107. This is due to a Financial Times article which stated that G7 countries are considering releasing oil from strategic reserves, potentially releasing up to 400m barrels of oil. As a result, the price of Brent Crude has begun trending lower, having been at $113 prior to the news release. A joint release of the strategic reserves of oil from G7 countries will help to cap the price of oil in the short-term. But, should the Strait of Hormuz continue to remain closed, we'd expect oil prices to continue to remain elevated, despite the potential release of strategic reserves from G7 countries. This would be due to a lack of travel through the Strait of Hormuz, but more than this, oil producers in the region would have to stop production (once full capacities are met) altogether. Once production is stopped, getting back to full production takes weeks, and even several months. All of this is a tailwind for elevated oil prices.

Ultimately, the longer the Strait remains 'closed', the likelihood of oil prices remain elevated, and the greater short and medium-term inflation becomes.

Markets Lean Heavily Risk-Off

Upon the Sunday night futures open, markets traded very risk-off, led by Brent Crude Oil, which opened in the pre-market at $108. As a result, the Dollar Index moved up by 0.50% to 99.40 - a flight to safety trade.

DXY (Dollar Index) 1D Chart

Whilst the US2Y Yield undone all of Friday's pullback, opening higher, with Yields once again pressing against range highs.

US2Y Yield 1D Chart

Alongside this, the US10Y Yield now trades close to one of its resistance levels at 4.20%.

US10Y Yield 1D Chart

Higher yields are pricing in increased future issuance (the US needs to fund the war), and higher inflation. Both aren't supportive for risk assets, whilst this dynamic also pushes interest rate cuts further out - with the market now pricing for just 1 interest rate cut in 2026. We expect the Fed to deliver more than 1 cut in 2026, as higher inflation (due to higher oil prices) can be considered 'transitory' by the Fed, whilst it also negatively impacts growth. Again, this might help the rate cuts argument further into the year, despite them being pushed further out in the near-term.

Equity indexes also traded lower (following the risk-off sentiment), with the Russell 2000 hit the hardest due to its sensitivity to interest rate cuts.

Nasdaq 1D Chart

Russell 2000 1D Chart

Note that both indexes are recovering off the overnight lows and are being bid in the pre-market going into the US session. Should we see a sustained bid in today's US session, it's possible a recovery can happen and for the lows of this week to already be in. This may then set us up for positive price action on the Crypto front, particularly as Bitcoin has remained range-bound, and it's attempting to bounce this morning.

Crypto Remains Range-Bound

Despite equity index weakness following escalations in the Middle East, Crypto and Bitcoin have held up relatively well with prices remaining range-bound.

Bitcoin disappointingly rejected from the $74k level last week, with price having pulled back to the $65,500 support overnight, although bouncing from this level currently.

BTC 1D Chart

With Bitcoin managing to hold the lows, despite equity indexes pulling back, we ask ourselves if seller exhaustion has been reached?

Positioning is there for prices to go higher, with open interest at low levels, which is paired with negative Funding Rates. However, price is likely going to need a strong Spot bid this week in order for prices to grind higher, and we saw towards the back-end of last week that the ETFs were net sellers of Bitcoin. And, with the conflict in the Middle East escalating, it may be unlikely that we see investors risking on into Bitcoin this week.

Bitcoin ETF Flows

Therefore, we remain of the view that Bitcoin is most likely to chop within a broader range between $63k and $74k, with the tighter price range between $65k and $71k. We expect this to continue for at least this week.

Lastly, we do have economic data out this week. This Wednesday, we'll get inflation data. The expectation is for PCE to tick down to 2.8% (from 2.9%), but for Core PCE to remain at 3.0% on the year-on-year figure, with the month-on-month figure ticking up.

Ultimately, the market is unlikely to react too much to this print, as this is old data - before the price of oil soared higher following the outbreak of the conflict in the Middle East. Markets now expect higher inflation, so January's print is far less relevant as the environment has changed significantly since then.

Cryptonary's Take

With little to no signs of de-escalation in the Middle East conflict, and Brent Crude Oil rising well north of $100/barrel, this puts the equity markets at risk of a more material pullback. Bitcoin has held up relatively well, but it remains range-bound, and we expect this to continue for the foreseeable future, following the rejection at $74k.

Bitcoin is likely to struggle for more significant upside due to the war and tighter financial conditions (higher yields, higher Dollar index) in the near-term. And for us to get more significantly bullish, we'd need to be of the view that this conflict is going to be short-lived, and unfortunately, this isn't our view. Our base case is that this lasts for another 3-4 weeks as a minimum, which would greatly impact oil production, meaning prices remain elevated. The result of this would be Fed rate cuts pushed even further out.

Our longer-term macro view remains the same; we expect Bitcoin to bottom between $50k-$63k in the coming months. The geopolitical escalations and the recent tightening in financial conditions only strengthen our view.

Key Dates Ahead

• Mar 11: PCE data.
• Mar 17–18: FOMC meeting.

This content is for informational and educational purposes only. Cryptonary is not authorised or regulated by the Financial Conduct Authority (FCA) or any other financial regulatory body. Nothing in this publication constitutes a personal recommendation or advice to buy, sell, or hold any virtual asset. Virtual assets may lose their value in full or in part and are subject to extreme volatility. You can lose all invested amounts and do not benefit from any form of financial protection. Past performance does not indicate future results.