In late May 2026, the global capital markets experienced a wave of intense volatility driven by a major geopolitical shift. Expectations for a US-Iran peace agreement continued to build, and international crude oil prices suddenly reversed course. On May 25, during the Asian trading session, the main Brent crude oil futures contract plunged over 8% to $94.11 per barrel, while WTI crude oil futures dropped more than 5% to a low of $90.32 per barrel—both marking their largest single-day declines of the month. However, contrary to some investors’ expectations, Bitcoin did not embark on an independent rally during the initial oil price drop. Gate data shows that BTC gained only about 1.96% over the past seven days, significantly underperforming the AI chip sector.
This divergence raises a fundamental question: As the Middle East geopolitical conflict—the world’s largest "uncertainty variable"—begins to recede, which sector stands to benefit more: energy or crypto?
Peace Expectations Take Shape, Geopolitical Variables Priced In
At the end of February 2026, the US and Israel launched military strikes against Iran, sharply escalating tensions in the Middle East. On March 2, Iran officially announced the closure of the Strait of Hormuz, a critical passageway for roughly 20% of the world’s oil shipments. The conflict quickly pushed Brent crude above $110 per barrel and WTI above $105, fueling global inflation expectations.
By May, the situation began to shift. On May 24, The Washington Post reported that the US and Iran had reached a memorandum of understanding framework. This framework included a 60-day extension of the ceasefire to negotiate a "final agreement" to end the Iran conflict permanently. If signed, it would fully reopen the Strait of Hormuz to shipping within 30 days. Additionally, Iran "pledged" not to acquire nuclear weapons, and both sides would discuss mechanisms to enforce this commitment over the next two months.
However, the agreement had not yet been finalized. The New York Times revealed that the potential deal did not address Iran’s missile program or explicitly require a halt to uranium enrichment. On May 25, President Trump posted on social media, emphasizing that the US would either reach a "great and meaningful agreement" with Iran or nothing at all. Iranian Foreign Ministry spokesperson Baghaei stated that while the two countries had reached consensus on most issues, "this does not mean an agreement is imminent."
An Iranian official disclosed that reopening the Strait of Hormuz would proceed in phases. In the first phase, the US would unfreeze $12 billion in Iranian assets and begin mine-clearing and lifting the blockade. According to Lu Ruquan, President of the China National Petroleum Corporation’s Economics & Technology Research Institute, it would take at least three to six months to fully restore the Strait’s operations, making a complete reopening in the short term unlikely. These public statements indicate that as of May 27, 2026, the notion of "peace is certain" is inaccurate. Market pricing is based on expectations, not established facts—the boundary between expectation and reality is key to understanding current price movements.
Oil Price Plunge and Diverging Crypto Market Trends
The international oil market responded first. On May 6, WTI crude briefly crashed to a local low, followed by a short-lived rebound as headlines fluctuated. On May 25, news of the draft agreement sent Brent’s main contract down more than 8% to $94.11 per barrel, with WTI hitting a low of $90.32. Data shows that on May 25, NYMEX WTI and Brent crude futures fell intraday to $89.41 and $93.21 per barrel, respectively—a cumulative decline of 15.02% and 14.56% from their May 18 highs.
Gate market data shows that as of May 27, 2026, Bitcoin was trading at $75,851.4, up 11.76% over the past 30 days. However, its seven-day gain was just 1.96%, and the previous week saw a rally followed by a sharp pullback—between May 26 and 27, prices briefly spiked before quickly retreating to the $75,000–$77,000 range. This sideways consolidation indicates that, during the window of steep oil price declines, Bitcoin did not display the independent upward momentum that many market participants had hoped for.
Meanwhile, AI chip giant Nvidia released its Q1 FY2027 earnings on May 20 (local time): total revenue was $81.62 billion, up 85% year-over-year; data center revenue reached $75.2 billion, up 92%; and net profit soared 211% to $58.3 billion. Nvidia’s midpoint guidance for Q2 revenue was $91 billion, exceeding analysts’ average estimate of $87 billion.
Additionally, spot gold came under pressure from US-Iran negotiation expectations, briefly falling below $4,550 per ounce on the morning of May 26. Since the escalation of the Middle East conflict, international gold prices have dropped about 13%. According to the China Foreign Exchange Investment Research Institute, this shift reflects a change in market logic from "geopolitical hedging" to "inflation and interest rate expectations."
Divergent Market Interpretations
There is significant disagreement over which sectors will benefit most as Middle East tensions ease. Mainstream views fall into three categories:
The first perspective sees the crypto market as a "macro indirect beneficiary" of falling oil prices. The core logic: lower oil prices ease inflation, opening the door for Fed rate cuts, and a low-rate environment supports high-volatility assets. This transmission chain was evident in the short-term support for Bitcoin and other crypto assets after the oil price plunge, but the marginal effect of easing expectations appears to be diminishing.
The second view is more cautious, arguing that the crypto market’s structural narrative is being reshaped. The "Bitcoin as digital gold" safe-haven story did not play out during the 2026 geopolitical conflict. Previously, Gate analysis highlighted a strong negative correlation between Bitcoin and US real interest rates: as real rates rise, the opportunity cost of holding Bitcoin increases sharply, and the "digital gold" thesis failed to provide independent support for BTC during elevated geopolitical risk. With the expectation of the Strait of Hormuz reopening, both energy and inflation risk premiums are receding, and Bitcoin’s "war/inflation hedge" label is being questioned. Data from May clearly shows that the 30-day correlation coefficient between Bitcoin and the Nasdaq 100 Index climbed to 0.72 at the peak of the conflict, suggesting Bitcoin behaved more like a risk asset than a safe haven.
The third viewpoint focuses on the structural appeal of the AI sector. Nvidia’s record-beating earnings and the Philadelphia Semiconductor Index’s ~60% annual gain demonstrate that capital is shifting from "geopolitical games" to the "technology supercycle" narrative. Some analysts note that once the market believes the Strait of Hormuz will reopen after the memorandum is signed, the "war premium" in oil and gas will unwind, prompting capital rotation from commodities and energy into growth stocks and AI names.
Prediction market data offers a quantitative lens on these divergences. According to PolyBeats data, as of May 27, the "US-Iran Permanent Peace Agreement" contract on Polymarket had attracted about $89,400 in bets, with a current "Yes" probability of 24.5% and an average buy-in probability of 27.3%. A related contract on prediction market Kalshi reached a 65% probability that same week. This aligns with the pricing of other Kalshi contracts tied to "USD/JPY trading range" and "S&P 500 volatility," reflecting expectations for easing conflict. The total trading volume for US-Iran contracts on Kalshi has surpassed $200 million across platforms, indicating that marginal capital is already positioning for de-escalation.
The Reality and Expectation of "Bitcoin as a Safe Haven"
The "geopolitical hedge" narrative for Bitcoin is one of the crypto industry’s most influential frameworks, but the 2026 US-Iran conflict has continually challenged this storyline.
Looking back at the early stages of the conflict, Bitcoin did not behave like gold as an independent safe haven. When oil prices spiked due to the Hormuz closure and global inflation expectations rose, Bitcoin fell in tandem with other risk assets. From May 18 to 20, Bitcoin’s price dropped below $77,000, falling more than 5% in 24 hours. The mechanism behind this: rising oil prices boost inflation expectations, prompting markets to anticipate tighter central bank policy, which squeezes liquidity and weighs on all risk assets—especially high-beta assets like Bitcoin.
Spot gold’s sharp decline after the late-February outbreak of conflict further validates a fundamental shift in market logic. Some analysts point out that the market is no longer trading "war itself," but rather the potential "high oil price–high inflation–high interest rate" chain reaction. Even though Bitcoin offers a narrative distinct from traditional financial instruments at the level of global sovereign currency trust, it remains highly dependent on global liquidity and real interest rates. When US real rates are high and the opportunity cost of holding non-yielding assets rises, a simple "inflation hedge" narrative cannot sustain a high premium.
When peace expectations emerge, Bitcoin’s rebound logic is not about "safe haven" demand, but rather the indirect effect of "rate-cut expectations improving liquidity." This means that, in the actual evolution of the 2026 geopolitical cycle, Bitcoin’s pricing has functioned more as a "macro liquidity proxy" than a "geopolitical hedge." As a result, the extent to which the crypto market benefits from Middle East de-escalation depends on whether it can reestablish a positive value re-rating narrative in an improving macro liquidity environment, rather than simply relying on the linear expectation that "peace is bullish."
Structural Shifts from Oil Price Transmission to Sector Allocation
The immediate impact of easing Middle East tensions is most pronounced for traditional energy sectors and global import-driven economies. Plunging oil prices reduce transportation and industrial energy costs, benefiting downstream industries squeezed by high input costs. However, the effects on financial assets are more complex:
First, the energy sector faces a double-edged effect: "rises on oil price gains, falls on oil price drops." Energy stocks, which previously enjoyed high premiums due to geopolitical risk, have declined in tandem with peace expectations as the risk premium is rapidly pulled out. This highlights that the energy sector’s valuation is more sensitive to Middle East cycles and geopolitical variables than to basic supply-demand fundamentals.
Second, the path for crypto asset gains is nonlinear. The chain—oil price drops → cooling inflation → rising rate-cut expectations → improved liquidity → risk asset revaluation—makes sense logically, but each link is subject to additional variables. If oil price declines are driven by collapsing global demand rather than supply recovery, the motivation for rate cuts may stem from recession fears, in which case crypto may not see a positive re-rating. Currently, global oil supply has shrunk sharply, with Gulf region output losses reaching about 14 million barrels per day, while demand weakness is nowhere near the scale of supply contraction. This means fundamentals are still providing medium- to long-term support for oil prices. If the actual reopening of the Strait of Hormuz takes longer than the market expects and oil prices rebound, crypto’s macro pricing will face new uncertainties.
Third, the AI sector is becoming a "capital competitor" to crypto assets. Nvidia’s record-breaking earnings, 92% year-over-year growth in data center revenue, and $91 billion next-quarter guidance signal the emergence of an alternative with the same "high-risk, high-volatility" profile as crypto, but with greater growth certainty and earnings visibility. As the macro environment improves due to Middle East de-escalation, marginal capital allocation decisions are becoming increasingly complex—investors are no longer choosing simply between "safe haven and risk," but among different types of risk assets in search of growth. The AI sector’s clear earnings support, structural policy tailwinds, and sustained compute demand make it objectively attractive to some crypto capital, especially in the early stages of liquidity improvement.
Conclusion
The expectation of easing Middle East tensions is driving a global market repricing in 2026. The sharp decline in oil prices has compressed the geopolitical premium in the energy sector, forcing a reassessment of the short-term value of traditional energy stocks. Meanwhile, crypto’s performance during this geopolitical inflection point reveals a deeper trend: the "geopolitical hedge" narrative for Bitcoin is being replaced by more complex macro transmission mechanisms—price swings now depend more on how oil price changes affect liquidity expectations through inflation and interest rates, rather than the level of geopolitical tension itself.
In this context, the extent to which the crypto market benefits from Middle East de-escalation depends on its ability to transcend its role as a "macro liquidity proxy." Crypto must leverage its foundation outside the traditional financial system and its digital value storage properties to establish a positive value re-rating narrative as macro conditions improve. At the same time, the rise of the AI sector sends an important signal: as geopolitical risk premiums recede, global capital allocation will increasingly focus on the fundamental quality and earnings validation of growth narratives, rather than simply on geopolitical variables.
