March 2026 in Crypto: The Ides of March

Shakespeare’s play Julius Caesar contains the famous “Beware the Ides of March” warning, which has become a metaphor for impending doom, betrayal, or a significant turning point. It was certainly apt for what occurred last month on the geopolitical front, after the US and Israel initiated air strikes on Iran.

Given the initial strikes occurred while tradfi markets were closed crypto exchanges became one of the few venues through which investors could react quickly to this geopolitical development. In the immediate aftermath, cryptocurrencies sold off smartly as investors rapidly reduced exposure resulting in market leader Bitcoin slumping to $64,000 – a year-to-date low.

When tradfi markets eventually reopened, crude oil and natural gas prices surged, global equity markets sold off, and the US dollar strengthened: a classic “risk-off” reaction.

Under normal circumstances, such a backdrop would weigh heavily on digital assets based on the popular “risk asset” narrative. However, following the initial knee-jerk reaction down, digital asset prices rapidly stabilized and subsequently rebounded. Part of the reason for this decoupling with other asset prices was because, having significantly underperformed over the past several months, sentiment among crypto players had become deeply depressed — reflected in a single-digit reading on the Fear and Greed Index, meaning positioning had become heavily skewed to the downside. In that environment, the “pain trade” was higher. According to Glassnode, more than $500 million in short positions were liquidated during this initial move higher, amplifying the rebound.

All Eyes On Energy

Investors’ primary focus was the impact the regional conflict would have on energy prices, particularly the risk of disruptions to oil flows through the Strait of Hormuz, a 34km wide stretch of water which handles roughly one-fifth of global oil shipments. This sensitivity stems from the fact that crude oil is a critical input for many economic activities. Consequently, sharp rises in the price of oil not only generates cost-push inflation but, by acting as an implicit tax on businesses and households, it can be a precursor to a deceleration in economic growth, possibly even recession.

To illustrate this potential detrimental growth impact, consider the following chart showing the price of West Texas Intermediate (WTI) crude oil – a key US benchmark – versus US recession dates over the past fifty years. Since the stagflationary OPEC oil shocks of the 1970s, there have only been two instances when a sustained surge in crude oil prices did not precede a recession: the 2020 downturn caused by the COVID-19 pandemic¹and the 2022 shock following Russia’s invasion of Ukraine.

Crude Oil Price vs. US Recessions

Source: Fred database

The optimistic take is that, thanks to the decreased energy intensity of modern economies, they are now better insulated from such shocks than in prior decades. If valid, this would suggest a US recession could potentially be avoided this time if energy prices remain elevated. However, it is worth noting that during the 2022 price spike, the US labour market was extremely strong—adding roughly 300,000 jobs per month—which helped sustain consumer spending in the face of higher energy costs.

This time around the US labour market is much less robust as evidenced by last month’s non-farm payroll report, which showed a major miss in the pace of job creation. Instead of the expected gain of 70,000 jobs, the US economy recorded a decline of 92,000 in February, which, combined with the 69,000 downward revision to the prior two months, suggested the US labour market was already losing positive momentum.

Such a substantial miss in the jobs report — one of the most influential releases in the US macro calendar — would typically be expected to trigger a significant repricing of US interest rates as investors anticipate more Fed easing. However, the surge in crude oil prices (not to mention the recently announced 15% trade tariffs) adds complexity to the US monetary policy outlook because it increases tension in the Fed’s dual mandate of full employment and low inflation. In such situations US central bankers proceed cautiously, as evidenced by the tone struck by Chair Powell during the post FOMC press conference held on March 18. This a perspective that investors have taken on board given the timing for the next rate cut has been pushed out until the December 2027 FOMC meeting (see chart). Just how cautiously, though, will be a function of how the conflict evolves because this will determine the future path of global energy prices.

Target Rate Probabilities For December 2027 FOMC Meeting

Source: CME Fed Watch Tool

Duration Risk

When one refers to duration risk in a tradfi setting typically it refers to the sensitivity a bond or portfolio’s price to changes in interest rates. In this case, however, I am referring to the length of time energy prices remain elevated: a brief spike being much less economically damaging than a sustained period of high energy prices.

When the airstrikes began, investors and policymakers widely expected the campaign to be relatively short-lived. Indeed, the Trump administration framed Operation Epic Fury as a “limited military operation”² designed to achieve rapid strategic objectives through overwhelming air power rather than a prolonged ground conflict.

Reinforcing such expectations was the limited political appetite in the US for another extended military engagement in the Middle East. After two decades of costly conflicts in Iraq and Afghanistan, American public opinion had shifted markedly toward scepticism about such foreign interventions³. This sentiment is particularly strong among the MAGA voter base that helped secure President Trump’s second term in office and whose support he needs in the upcoming midterm elections now less than six months away. A drawn-out conflict carries significant political risks, potentially costing Republicans their slim majority in the House of Representatives, and leaving Trump a lame-duck president for the final two years of his administration⁴.

Motivates And Means

The key question is how one can assess the likely length of the war (and hence the impact on energy prices). One of the more obvious ways is to assume the US will halt the air campaign once its stated military objectives had been achieved.

According to the Trump administration, the primary motivation for the airstrikes was to prevent Iran from obtaining nuclear weapons amid fears that last year’s strikes on three of Iran’s nuclear sites did not destroy the leadership’s nuclear capability. However, this was not the sole motive. The US also sought to neutralize Iran’s ballistic missile programme which represented a threat to US military bases and allies in the region; to weaken their regional proxy networks such as Hamas and Hezbollah; and, most substantively of all, to bring about regime change by encouraging Iranians to rise up against their government, a prospect that appeared more plausible following the internal uprising that the authorities had only recently succeeded in suppressing resulting in the deaths of thousands of protestors.

These multiple military and political objectives make it extremely difficult to assess at what point the airstrikes on Iran will be deemed successful resulting in their cessation. This considerable ambiguity is likely not accidental, but rather by design, because it gives President Trump plenty of wiggle room. Unfortunately, however, uncertainty is not something that sits well with investors.

The Ramp: Off Or Up

As alluded to above, President Trump likely wants to find a rapid off-ramp to limit both political and economic fallout. He would also want to avoid a ‘boots-on-the-ground’ scenario, which could not only prolong the conflict given Iran’s large, mountainous terrain—roughly 1.6 million square kilometers—but also draw inevitable comparisons to the failed Afghan war, which would be political dynamite to the Democrats ahead of the crucial mid-term vote.

Among the stated objectives, regime change is the most difficult to achieve solely through airstrikes, as explored in a series of well-timed Substack articles by Professor Robert Pape of the University of Chicago. Based on decades of research into the political effects of airpower—Pape previously taught at the School of Advanced Air and Space Studies—he concludes:

“For over a century, leaders have tried to use airpower to force regime change from the sky. The theory is always the same: strike leadership targets, shock the system, fracture the regime, avoid a ground war.

It feels decisive. Clean. Controlled.

The record is brutal.

Airpower alone has never produced positive regime change. I don’t mean rarely. I mean never. [author emphasis]”

Pape’s argument is that air campaigns aimed at political transformation frequently produce the opposite of their intended effect. Rather than fracturing regimes, external attack tends to harden them, reframing the conflict as a matter of national survival.

Judged by the regime’s response so far, such concerns have been more than validated. Having long anticipated the possibility of external military action, the Iranian leadership structured its command system accordingly, dispersing authority into semi-autonomous networks across military, security, and political institutions. As a result, even after the killing of senior figures, including the Supreme Leader, Iran was able to retaliate via missiles and drones (see below), illustrating the resilience of a decentralized command structure, a familiar concept in the crypto world.

Iran Missile and Drone launches

Source: World Insights

A Crude Weapon

The target of Iran’s missile and drone attacks were the GCC (Gulf Cooperation Council) states, many of which host significant US military facilities. From Tehran’s perspective, US military bases and assets hosted in GCC countries were legitimate targets because they were part of operations against Iran. But there is more to it than that because Iranian missiles, and particularly drone strikes, also hit key infrastructure—oil and gas facilities, airports, and transport hubs— causing economic disruption both regionally and globally. The intention of the Iranians was to raise the political and strategic cost of the war for Washington and its partners as way to ensure their survival.

In addition to these retaliatory strikes, commanders from the IRGC also declared that the Hormuz Strait was closed and warned that any ship attempting to transit it⁵could be attacked (a position reiterated by Mojtaba Khamanei, the second son of the former Supreme Leader who was named as his replacement, an “unacceptable” choice according to President Trump). In response, major shipping companies suspended transit through the Strait as the withdrawal of marine war risk insurance made commercial shipping effectively impossible – see image. Once the initial fears about the flow of crude oil supply through the Strait of Hormuz materialized, crude oil prices ratcheted even higher, hitting more than $100 a barrel.

Strait of Hormuz Daily Vessel Count

Source: World Insights

In a bid to stymie Iran’s efforts to increase the economic cost of the conflict by pushing up the cost of crude oil, the IEA announced it would release a record 400 million barrels from global emergency global reserves (twice as much as put into the market after Russia’s invasion in 2022). In addition, the US agreed to a 30-day waiver on sanctioned Russian, and even Iranian, oil already in loaded onto vessels. Finally, and perhaps most telling of all, the US ordered air strikes on 90 military targets on the tiny island of Kharg, which sits just off the coast of mainland Iran, and which handles an estimated 90% of Iran’s crude oil exports. Even though taking it offline would cut off the regime’s main source of revenue and cripple its ability to fund its military and operations across the region, the island’s oil infrastructure was not targeted. The rationale is simple: removing Iran’s exports of 1.7 million barrels of crude oil per day would send prices into the stratosphere. Just as importantly, by deliberately avoiding such action, the US preserves Kharg Island as a critical pressure point—one it can exploit as ongoing leverage over Iran in the medium term.

Exit Strategies

One option open to President Trump to bring about a swift resolution to the conflict is to back away from the regime change objective⁶. While this would leave Iran’s leadership structure intact, its ability to project power beyond its borders has been severely curtailed due to its missile, drone, and nuclear capabilities, not to mention its network of proxies, having been significantly degraded. While these capabilities can be rebuilt over time, the immediate threat they pose regionally has been removed.

However, one goalpost that cannot be so easily moved is securing control of the Strait of Hormuz, because it would be extremely hard for the US to claim victory if it is unable to prevent Iran from controlling shipping through the Strait. Indeed, as Ray Dalio warned a couple of weeks ago:

“My reading of history and sense of what is now happening leads me to believe that if the U.S. were to lose in this way, there would be a significant risk that losing control of Hormuz would be for the United States what the Suez Canal Crisis was for Great Britain (in 1956) and analogous defeats were for the Dutch Empire in the 18th century and the Spanish empire in the 17th century. The pattern of events that leads to the breakdown of empires is almost always the same.”

This, then, will almost certainly be the key determinant as to when the war is concluded.

The danger is that efforts to re-open the Strait could see the conflict deepen further, which is the “escalation trap” referred to above by Professor Pape. Moreover, failure to re-open the Strait will maintain a sustained bid under crude oil prices. This is not the only inflationary impact because the Strait of Hormuz is also a key transport route for over 20% of global LNG and nitrogen-based fertilizers (a major downstream product of natural gas). The longer the Strait remains closed, the greater the stagflationary headwinds – a macro scenario that would be toxic for both tradfi and digital assets near term because unlike prior economic crises central banks cannot print more oil, natural gas or fertilizer.

A Critical Chokepoint

Source: X

The likely response to a sustained supply shock is rerouting of global trade flows where possible and for governments to introduce fiscal measures, such as energy subsidies or price caps, to soften the impact on households and businesses, possibly in tandem with energy rationing. Such policies would provide some short-term support to the global economy, but at the longer-term cost of adding to already very elevated government debt loads, the servicing of which has become more costly as yields on government debt have risen since the start of the conflict on the back of increased inflation expectations. Ultimately, this leaves governments with few options beyond inflating away those liabilities (unlike oil, central banks can print money to buy government debt), reinforcing the structural case for crypto as one of the cleanest hedges against fiat debasement. The realization of this by investors will be what drives the next major bull market in digital assets.

Bitcoin Privacy Issues

While I agree with Ray Dalio on his reading of the situation vis-à-vis the Strait of Hormuz, the same cannot be said for another one of his views that he espoused last month. Both he and Chamath Palihapitiya – the billionaire Canadian-American venture capitalist and entrepreneur – argued that Bitcoin is unlikely to be adopted in a meaningful way by central banks. Their reasoning is rooted in the public nature of the Bitcoin blockchain. Full transaction transparency is a fundamental requirement for a decentralized monetary system, because without a shared public ledger it would be impossible for nodes in the network to independently verify transactions and ensure that coins are not double-spent.

According to Dalio and Palihapitiya, this transparency makes Bitcoin unsuitable for sovereign reserve management. Central banks typically require discretion when managing reserves, intervening in markets, or transferring large amounts of capital across borders. In their view, large purchases or movements of Bitcoin by a central bank could potentially be traced on-chain, revealing sensitive financial or geopolitical information.

Palihapitiya also raises a second concern that stems from the same feature of the network: fungibility. In a fully fungible asset, every unit is interchangeable with another, like one ounce of gold or a US dollar bill. With Bitcoin, however, every coin carries a visible transaction history. As a result, coins associated with illicit activity, such as hacks or sanctions violations, could be treated differently by exchanges or regulators. In theory, this traceability could weaken fungibility and create complications for central banks managing reserves.

While these arguments appear persuasive at first glance, they overlook an important point. Bitcoin addresses are not tied to real-world identities on the blockchain itself. A central bank could therefore hold Bitcoin in wallets that are not publicly associated with it. Holdings could be distributed across many addresses, managed through custodial structures, or moved using transaction strategies designed to make attribution difficult. In other words, transparency of the ledger does not necessarily imply transparency of ownership.

Moreover, even if a central bank chose to disclose its wallet addresses, the outcome might not be negative. Publicly verifiable holdings would allow a central bank to demonstrate provable reserves, something that is extremely difficult with traditional reserve assets. Just think about all the debates over auditing the Fed’s gold holdings at Fort Knox. Bitcoin, by contrast, could enable a level of transparency where anyone can independently verify reserve holdings on the blockchain.

There is also another final – big picture – objection to their arguments.

The Big Picture

While ostensibly a regional conflict, the war with Iran goes much deeper. Put into perspective, it is part of a strategic game being played by the world’s superpowers, who are jockeying for position in the emerging new world order, which as we outlined in the January Update is “power” rather than “rules” based. Crucially, the tactics being deployed in this contest is leading to a breakdown in international coordination and a deterioration in trust between the major actors, resulting in more fragmented and transactional alliances. Recent developments underscore this shift, with European and Asian countries declining to join US efforts to reopen the Strait of Hormuz, while Russia and China have been providing military support to Iran.

Against this backdrop, the negatives outlined by Dalio and Palihapitiya may ultimately prove less significant than the advantages Bitcoin and other digital currencies offer. Unlike traditional reserve assets, for example, Bitcoin is neither issued nor controlled by any single entity, meaning it cannot easily be frozen, sanctioned nor subject to capital controls. Neither can it be debased because its supply is embedded in code and enforced by its decentralized network, which underpins its usefulness as a store-of-value. Crypto’s ability to serve as a neutral global settlement layer will likely be viewed as an increasingly valuable trait, which would serve to accelerate adoption across both private and public sectors, including by central banks. For an asset whose supply is finite by design, increasing demand inevitably means only one thing – higher prices.

1 One should also recognize the uniqueness of the Covid pandemic. It was akin to pushing the pause button on the global economy.

2 Designating it as such, and not a war, also meant President Trump did not need approval by Congress as per Article 1 of the US constitution – see: https://www.npr.org/2026/02/28/nx-s1-5730203/iran-israel-trump-congress-strikes-reaction

3 As evidence of this shift, on March 17, National Counterterrorism Center Director Joe Kent resigned over the war in Iran saying the country posed “no imminent threat” to the US – see: https://www.bbc.co.uk/news/articles/cg4g66r3z40o

4This assumes, of course, that Trump does not find a way to stay on as President for a third term – a scenario many left-leaning political commentators have warned about.

5 Exceptions were made for tankers shipping to China, India and others for a $2M “pay-to-Pass” fee – see: https://www.yahoo.com/news/articles/iran-2-million-pay-pass-180034968.html .

6 On March 25 it was reported that the US had sent Tehran a 15 point peace plan to end the war. None of these conditions included regime change, suggesting the Trump administration realize that this is an unrealistic goal. The Iran leadership, however, flatly deny that any peace talks have occurred, stating that the US is “talking to itself”. What the truth of the situation is hard to discern because it is quite plausible that the US is simply deploying delaying tactics while they strengthen their position militarily – see: https://www.aljazeera.com/news/2026/3/25/us-talking-to-itself-says-iran-as-trump-claims-wheels-of-diplomacy-turning