Written by: Cointelegraph
Compiled by: AiddiaoJP, Foresight News
During the war between the U.S. and Iran, Bitcoin has been one of the strongest performing assets. However, as the bond market shows signs of being 'out of control,' Bitcoin's upward momentum is beginning to show signs of exhaustion.
Key Points:
- If the U.S.-Iran war prolongs, the benchmark U.S. Treasury yield could rise by 200 basis points.
- Historical experience suggests that oil-related conflicts tend to push up inflation and suppress risk appetite. Based on this, it is speculated that Bitcoin's price could fall below $50,000 in 2026.
Oil Supply Shock Could Push U.S. Treasury Yields Above 5%
Since the U.S. and Israel launched attacks on Iran on February 28, the benchmark 10-year U.S. Treasury yield has climbed to about 4.42%, hitting a nine-month high.
Monthly performance of U.S. 2-year, 10-year, and 30-year Treasury yields. Source: TradingView
Among them, the 30-year Treasury yield rose to about 4.97%, and the 2-year Treasury yield also increased to the range of 3.95% to 3.98%.
Affected by the war, oil prices have surged, exacerbating market concerns about rising inflation, thereby pushing Treasury yields higher. Against this backdrop, the market widely expects no rate cuts within 2026.
U.S. President Donald Trump announced a five-day suspension of operations, temporarily alleviating immediate concerns about strikes on Iranian energy facilities. However, as Iran denies any negotiations and cross-border attacks continue as of Tuesday, the conflict situation remains effectively uncontrolled.
Source: X
Market observers have expressed concerns, believing that U.S. Treasury yields face further upside risks. Technical analysts further pointed out that if the 10-year Treasury yield breaks through the current symmetrical triangle pattern, it could rise by 200 basis points to 6.4%.
Monthly chart of U.S. 10-year Treasury yield. Source: TradingView
Rising yields increase the opportunity cost of holding risk assets such as stocks and Bitcoin. If Bitcoin continues to exhibit risk asset attributes, a break above 5% in the 10-year Treasury yield could trigger selling pressure in the Bitcoin market.
Historical Cases of Oil-Related Shocks
Historically, short-term oil-related conflicts typically cause sharp but brief fluctuations in Treasury yields and stock markets, while long-term supply shocks can push yields up persistently and suppress stock markets continuously.
During the 1973 Yom Kippur War and the Arab oil embargo, Treasury yields initially rose slightly, then climbed significantly as inflation intensified, with the S&P 500 index falling about 41% to 48% during the 'stagflation' phase.
Annual chart of U.S. 10-year Treasury yield and S&P 500 index. Source: TradingView
During the 1979 Iranian Revolution, the bond market reaction was more intense, with the 10-year Treasury yield rising about 150 to 200 basis points in the following year, while the stock market correction was relatively moderate.
During the 1990-1991 Gulf War, the 10-year Treasury yield rose about 50 to 70 basis points, and the S&P 500 index fell about 16% to 20%, rebounding after the conflict was brought under control.
After the outbreak of the Russia-Ukraine conflict in 2022, there was also a rise in Treasury yields and a short-term drop of 5% to 10% in the S&P 500 index.
The current conflict between the U.S., Israel, and Iran seems to be in the early stages of these historical patterns. If the conflict escalates further and oil prices remain high, Treasury yields could rise further, and risk assets may face a new round of downward pressure.
Bitcoin still maintains a high correlation with the S&P 500 index. Therefore, unless the conflict situation eases quickly, Bitcoin's price is likely to face greater downward pressure.
To What Level Could Bitcoin's Price Drop?
From a technical analysis perspective, if Bitcoin's price breaks below the current bear flag pattern, it could further drop to $50,000 or even lower in the coming months.
Bitcoin/USD three-day price chart. Source: TradingView
This technical expectation is largely consistent with trading data from prediction markets. Currently, traders estimate a 70% probability that Bitcoin will fall below $55,000 in 2026, and a 46% probability it will fall below $45,000.
BitMEX co-founder Arthur Hayes stated that if the U.S.-Iran war prolongs, it could force the Federal Reserve to adopt loose monetary policies, which would be a positive factor for Bitcoin.
He noted: 'The longer the conflict lasts, the more likely the Fed is to print money to support the U.S. war machine.' He further added:
'When central banks start printing money, I will choose to buy Bitcoin.'
