For nearly a decade, the prevailing wisdom was that crypto trades strictly with risk assets. Stocks go down, Bitcoin goes down. Simple enough.
Monday’s session just threw a wrench into that narrative. A protracted supply crisis in one of the world’s most important oil hubs has sent stocks into a frenzy – with Bitcoin, Ethereum and a host of major altcoins climbing as if they didn’t get the memo.
What happened in Hormuz?
The Strait of Hormuz supplies about 21 percent of the world’s daily oil consumption. Over the past nine days, one tanker has removed 20 million barrels of oil per day from the world’s oil supply.
According to this, the global demand for oil is about 100 million barrels per day. So we’re going to go dark on about a fifth of the planet’s power grid for over a week.
The disruption sent oil prices soaring earlier in the day, fueling inflation fears and dragging down stock futures. Wall Street opened sharply lower on Monday as traders priced in the possibility that the shutdown could extend into a second or even third week.
Then the G7 intervened – or at least announced plans to intervene. The group of wealthy nations said they would coordinate production of strategic oil reserves, a move designed to flood the market with enough barrels to make up for the Hormuz gap. The announcement briefly pushed crude oil prices below $100 a barrel, although skeptics questioned whether the release of reserves alone could replace a functional shipping line.
Here it is: backup releases are a temporary band-aid in a structural wound. For example, the U.S. strategic oil reserve currently contains about 370 million barrels, enough to cover about 18 days of the Hormuz shortfall if the U.S. acted alone. Mathematics does not exactly inspire long-term confidence.
Crypto breaks the correlation
While the S&P 500 and Nasdaq fell at the open, crypto markets staged a quiet but meaningful rally. Bitcoin is nearing $69,000, up 2.4% over the past 24 hours and up 2.7% over the past week. Ethereum surged above $2K with a daily gain of 4.0%. Solana traded around $85, up 3.6%, and XRP reached $1.37.
The difference is remarkable because it hasn’t been normal lately. For most of 2024 and into 2025, Bitcoin’s correlation with the Nasdaq was between 0.5 and 0.7, meaning the two assets mostly moved in the same direction. Monday’s split suggests that at least some equities are reacting differently to crypto when there is a geopolitical supply shock than they are when there is a Fed rate scare or a loss of earnings.
One possible explanation: oil crises are mainly about physical shortages and the risk of currency depreciation. As energy costs continue to rise, central banks are faced with a stark choice – increase the rate of interest to a slowing economy or allow inflation to rise. Either way, the purchasing power of fiat currency is under pressure. A fixed supply of 21 million Bitcoin coins seems relatively attractive in that environment, at least to the part of the market that still buys the “digital gold” thesis.
And yet, the Fear and Greed Index tells a more complex story. It currently sits at 8 – deep in the “Extreme Fear” and barely budges from last week’s 10 reading. Traders buy, but they do so while nervously looking over their shoulders.
This sort of divergence—prices rising, sentiment falling—often manifests itself in the course of short-term rallies or alternative asset trading, rather than genuine conviction. It’s the market equivalent of eating a food you’re not sure about.
What this means for investors
The correlation break is the most important signal here, but it comes with caveats. A single divergence session does not mean that crypto is permanently separated from stocks. We’ve seen this one-off split before — in the early days of the Russia-Ukraine conflict in 2022, for example, Bitcoin rallied as a safe-haven play for days before reverting to its risk-asset behavior.
What makes this time different is its duration. If the Hormuz crisis lasts weeks rather than days, and crypto holds its gains while stocks deteriorate, it will be a critical point for the disengagement thesis. Watch the correlation coefficient between BTC and Nasdaq over the next 10 to 14 trading sessions – if it drops below 0.3, something structural could really change.
The stock G7 sheet is also a wild card. If it succeeds in pushing crude oil prices below $100, the stock could soon be in flux and the gap would be split. If stocks are in short supply, which is true given the scale of the Hormuz meltdown, we could see a steady flight to non-core assets.
Mobile mining tokens, interestingly, were the top performing category of the week, gaining 29.9% in seven days. It’s a niche corner of the market, but it points to a renewed interest in proof-of-work narratives during energy crises — almost counterintuitively, since mining consumes energy. The logic might be that miners with cheap contracts and bundled power become more valuable than competitors when energy prices rise. Or it could just be speculative fluff. Maybe some of both.
The danger here is real. Geopolitical supply shocks are inherently unpredictable. A decision in Hormuz tomorrow morning could throw off all trade, sending crude oil, stocks and crypto potentially flat or lower as the safe-haven offer evaporates. Posturing around a crisis that can be resolved with a diplomatic phone call is not a low-risk strategy, to put it mildly.
For long-term holders, the more interesting question isn’t whether the crypto will split this week. This is whether repeated episodes of geopolitical stress will gradually teach institutional investors to think of Bitcoin as a technical proxy rather than a leveraged one. Every crisis that makes even a short difference adds a small data point to this portfolio construction argument.
Bottom line: Monday’s Crypto rally is a significant but fragile point in the oil-driven stock selloff. The correlation break is now real, but the Fear and Greed reading of the 8 shows that the market itself is not convinced that this is the start of something bigger. Watch the Hormuz situation and the BTC-Nasdaq correlation in the next two weeks – there will be a real signal.
