Bitcoin surged back above $105,000 amid escalating geopolitical tensions in the Middle East, driven by fears of an oil supply shock caused by Iran’s new restrictions on tanker transit through the Strait of Hormuz. This narrow waterway is a critical chokepoint, handling about 20% of the world’s oil trade, making any disruption there a major threat to global energy markets. Iran’s recent statement that all oil and LNG tankers must obtain prior approval to pass through the Strait has heightened concerns over a potential blockade, fueling fears of sharply rising oil prices.

Market observers see Iran’s move as a strategic escalation in a region already marked by volatility. According to defense analysts, Iran’s power lies not only in its missile capabilities but also in its ability to shut down this vital trade route, which could cripple global oil supplies. Analysts like Andy Lipow from Lipow Oil Associates warn that any attack on Iran’s oil infrastructure or a full closure of the Strait could push Brent crude prices into the $120 to $130 per barrel range. JPMorgan has echoed similar forecasts, suggesting that such disruptions could cause oil prices to spike to $120 and push U.S. consumer inflation (CPI) to around 5%.

Despite reports that OPEC+ plans to increase oil production by over 400,000 barrels daily starting in July, many experts caution that additional supply might not be enough to offset rising demand, especially from key producers like Saudi Arabia. This dynamic keeps oil prices supported, adding further pressure on inflation expectations. Political commentators suggest that higher oil prices won’t prompt the Federal Reserve to cut interest rates anytime soon, as inflationary pressures remain persistent.

Against this backdrop, Bitcoin has rallied as investors seek a hedge against inflation and geopolitical uncertainty. After briefly dipping below $103,000, Bitcoin rebounded strongly to trade above $105,000. This recovery places the cryptocurrency within a stable range of $100,000 to $110,000 for the month, indicating some resilience amid market volatility. Analyst Daan Crypto Trades noted that Bitcoin’s price swings have narrowed recently, with a roughly 10% range between lows and highs, suggesting consolidation ahead of major economic events.

Gold, another traditional safe haven, has also experienced increased volatility as traders adjust their positions in response to shifting risk sentiment and inflation fears. Rising energy costs threaten to drive consumer prices higher worldwide, strengthening demand for assets perceived as stores of value, such as Bitcoin and gold.

Investors are also closely watching the upcoming Federal Open Market Committee (FOMC) meeting, where the Fed is expected to decide on interest rates. Current market tools, like the CME FedWatch Tool, indicate that traders do not anticipate an immediate rate change. However, Fed Chair Jerome Powell’s comments will be scrutinized for hints about the central bank’s strategy to tackle persistent inflation amid geopolitical disruptions. A hawkish tone could fuel market turbulence, while dovish signals might ease concerns.

The intersection of energy market shocks and monetary policy uncertainty creates a tense environment for crypto markets. Bitcoin’s recent price resilience demonstrates its growing appeal as a hedge, but continued volatility is likely as geopolitical risks unfold and the Fed balances inflation control against market stability. If tensions in the Strait of Hormuz escalate further, or if the Fed signals a tougher stance on rates, Bitcoin’s test of support levels and price range could intensify, making the coming weeks critical for investors.