Kagan: U.S. setback in Iran raises macro risk for Bitcoin

Robert Kagan, a long-time voice in the interventionist wing of U.S. foreign policy, wrote in a recent essay that the United States likely suffered a strategic setback in Iran over control of the Strait of Hormuz. He warned that the development could introduce a new macroeconomic risk for Bitcoin.

Kagan described the Strait of Hormuz as a major energy chokepoint that handles about one-fifth of global oil flows and a large share of Gulf liquefied natural gas shipments. He argued that if passage through the strait becomes conditional on Iranian decisions, markets would treat transit as a contested route subject to military risk, mediation, higher insurance costs and diplomatic bargaining.

Entrepreneur Arnaud Bertrand described the change as “freedom of navigation has been inverted into a permission-based regime.” Kagan and others point to recent patterns in which naval guidance for stranded vessels and diplomatic mediation have been used to clear specific cargoes through the strait.

Kagan outlined how higher energy and shipping costs would transmit through global markets. Higher crude prices raise retail fuel costs, LNG disruption can push up electricity and industrial fuel prices in Europe and Asia, shipping delays increase working capital needs, and war-risk insurance lifts delivered costs. He said those factors can sustain headline inflation and lift inflation expectations without a formal embargo.

On monetary policy, Kagan warned that persistent Hormuz risk could slow the Federal Reserve’s easing path by keeping inflation stickier than expected. He wrote that delayed rate cuts would keep real yields higher and liquidity tighter, a condition that typically pressures speculative assets.

Kagan also linked battlefield logistics and weapons inventories to investor expectations. He argued that evidence of depleted U.S. stocks or weaker naval deterrence could lead investors to reassess the stabilizing role that U.S. security guarantees have played for energy and trade lanes.

On financial markets, Kagan outlined a two-stage response. The first stage would be mechanical volatility: higher oil, rising inflation breakevens, delayed rate cuts and stronger dollar demand could drain liquidity from crypto and other speculative assets, putting downward pressure on prices. The second stage would be structural: if markets come to view the episode as evidence that U.S. power cannot reliably suppress system-level geopolitical risk, allocations could shift toward assets outside traditional state balance sheets, including gold and Bitcoin.

Kagan framed the issue as one of control over escalation, shipping lanes, allies, energy prices and the policy path. He wrote that when institutions tied to U.S. forward presence acknowledge limits to that control, markets would need to price the change across oil curves, shipping rates, inflation expectations, Treasury yields and assets used for reserve diversification.