Trump's one word, oil prices stall, crypto counterattack

Wake up to a crashing oil price.

Yesterday, oil prices surged to $110 per barrel but then experienced a historic collapse, dropping over 30% in a single day, briefly falling below $84 per barrel, flooding social media.

Yesterday, I wrote an article titled “Why does oil rise while Bitcoin falls?” analyzing the relationship between oil and Bitcoin prices. As we discussed earlier, this morning’s sharp decline in oil prices and the temporary cooling of inflation expectations led to a significant rebound in Bitcoin, bringing it back to the $70,000 level.

This again proves Bitcoin’s role as a “liquidity thermometer.” Once the inflation-boosting signal from rising oil prices cools off, market fears of rate hikes ease, liquidity expectations recover, and Bitcoin quickly regains ground.

This rise and fall also reflect the latest stance of the Trump administration on the war situation.

In his speeches last night and this morning, Trump’s attitude shifted subtly but importantly. Although he previously demanded Iran’s “unconditional surrender,” he now stated at a recent press conference that the U.S.-Israel coalition’s military operations are “progressing very smoothly and ahead of schedule,” implying that major military objectives are “basically achieved.”

He also hinted at a ceasefire, saying the conflict will “very soon” be resolved. While he didn’t specify a ceasefire timeline, this “mission nearly accomplished” stance greatly alleviates market fears of a prolonged or full-scale war.

Meanwhile, concerns over the Strait of Hormuz have also eased significantly this morning. The core logic behind the previous oil price surge was market fears that this critical global oil transit route—carrying nearly one-fifth of the world’s oil—would be blocked. Today, Trump announced several measures: plans to deploy the U.S. Navy to escort oil tankers, consider waiving some energy sanctions to offset Middle East disruptions, and mentioned moving about 100 million barrels of Venezuelan oil into the market.

At the same time, G7 finance ministers issued a joint statement saying countries are ready to release emergency strategic oil reserves. With multiple measures in play, a lot of short-term speculative funds began to close positions and withdraw near $120.

Is Trump really going to cease hostilities?

Early in the morning, I read many military analyses, most of which agree that, like the “justified” start of a war, Trump is now looking for a dignified way to “declare victory” and withdraw, so he can end the military operations gracefully and quickly.

From a military perspective, the U.S. has already achieved “significant victory” through initial targeted killings of Iranian leaders and large-scale destruction of Iran’s air and naval forces. Therefore, some analysts believe that as long as actual control over the Strait of Hormuz is established—whether through U.S. military or private security interventions—the energy corridor’s security can be assured.

This “take the opportunity to stop” mentality stems from the Trump administration’s desire to avoid repeating past mistakes. Trump is well aware of the complex Middle East situation and fears that long-term deployment of ground troops could lead to endless guerrilla warfare and popular resistance, similar to the Iraq War, ultimately turning into a costly and exhausting conflict.

The desire to end the conflict quickly is driven not only by military judgment but also by more tangible economic “pain points”: oil prices and inflation.

The chain reaction caused by soaring oil prices has put significant pressure on the U.S. economy. When crude oil briefly surged past $119 per barrel, domestic trucking costs rose sharply, directly passing through to consumer prices and causing a broad increase in inflation. Trump knows very well that if oil prices are not quickly stabilized, runaway inflation could threaten his political reputation and be used against him by opponents. Therefore, releasing the expectation that “the war will end very soon” to curb market speculation and drive oil prices back below $90 is a key strategy to ease domestic economic tensions.

Additionally, the internal security situation and the midterm election agenda are also influencing factors. There are signs of potential “sleeping cells” in the U.S., with arrests of immigrants suspected of making bombs in places like New York. Domestic security unrest triggered by the war is another reason Trump is eager to “calm things down.”

Meanwhile, Trump is pushing hard for the passage of the “Save America Act,” aiming to regulate voting rights and pave the way for the midterm elections. He prefers to focus on elections and domestic governance rather than staying long on a battlefield that could erupt into terror attacks and is bleeding money every day. Therefore, he needs to find a balance within the next one or two weeks to withdraw troops quickly.

So, the framework we discussed in our previous article now has a new variable: the duration of the war, which might be shorter than the most pessimistic expectations.

If Trump indeed finds a “victory declaration” opportunity soon, the geopolitical premium on oil will dissipate faster, inflation narratives will cool down, and the Federal Reserve’s rate cut path could reopen. At that point, the liquidity expansion logic Raoul Pal talks about will no longer be just a medium-term expectation but could arrive sooner than most expect.

Today’s Bitcoin rebound might just be a preview.