Massive Chinese Crypto Whale: “The Market Hasn’t Fully Priced in the Closure of the Strait of Hormuz Yet”

Garrett Jin, a well-known whale in the cryptocurrency market, published a noteworthy analysis of global markets. In his assessment, Jin argued that oil prices are not merely a consequence of the war between Iran and the US, but a fundamental determinant of the war itself.

According to Jin, while oil is at the heart of today’s geopolitical conflicts, all financial variables such as stocks, bonds, crypto assets, and even central bank policies are actually shaped by the “downstream” effects of oil prices. The analyst states that investors who can accurately predict the direction of oil prices can also accurately read the overall direction of global markets.

The analysis notes that the closure of the Strait of Hormuz for weeks has not yet been fully priced into the markets. Jin states that the conflict has evolved from an initially expected limited air operation into a prolonged war of attrition. The deployment of US ground troops to the region weakens the likelihood of a quick resolution, and the conflict is seen as evolving into a longer-term and costly process.

According to Jin, Iran’s strategy is not to achieve a direct military victory, but to force the Washington administration to back down by making the war as costly as possible. This is predicted to lead to a structural upward trend in oil prices rather than just temporary spikes.

The analyst argues that the most likely scenario is a prolonged war of attrition, which aligns with U.S. interests. In this scenario, high oil prices could shift global energy demand to North America and stimulate U.S. domestic production. Jin also argues that markets have priced in the existence of the war but not yet its duration.

On the other hand, data from the forecasting market Polymarket also reveals that the likelihood of the conflict ending in the short term is low. According to this data, the probability of a ceasefire between the US and Iran by the end of this month is 18%, while this probability is measured at 34% for the end of May and 46% for the end of June.

*This is not investment advice.