Rising tensions in the Middle East could soon ripple through global markets—and the crypto sector may not be spared. According to Arthur Cheong, the founder and CEO of DeFiance Capital, escalating geopolitical risks may trigger supply chain disruptions that ultimately shake investor confidence in risk assets like cryptocurrencies.
In comments posted on the social platform X on March 20, Cheong warned that expectations of a quick policy reversal by the United States in the region may be overly optimistic. Some market watchers had speculated about a so-called “TACO” moment—short for a sudden retreat from aggressive policies associated with Donald Trump. However, Cheong believes such a reversal is unlikely.
Pressure on Iran May Continue
According to Cheong, both the United States and Israel appear committed to maintaining pressure on Iran. Instead of easing tensions, the geopolitical situation could intensify in the coming weeks.
One of the biggest concerns centers around Kharg Island, Iran’s primary oil export hub. Reports have suggested that the U.S. has considered options such as occupying or blockading the island as a way to force the reopening of the vital shipping route known as the Strait of Hormuz.
This narrow waterway is one of the world’s most important energy chokepoints. Roughly 20% of global oil shipments pass through the strait. Any disruption to traffic there could cause major shocks to oil markets and the global economy.
Supply Chain Risks Could Hit Markets
Cheong warned that further escalation in the region could damage already fragile global supply chains. A sharp spike in oil prices would likely follow if shipping routes were disrupted, adding fresh inflation pressure worldwide.
Historically, such geopolitical shocks push investors toward traditional safe-haven assets while reducing appetite for riskier investments. In those situations, stocks and cryptocurrencies often face selling pressure.
For the crypto market, that shift could be significant. Assets like Bitcoin and Ethereum are still widely viewed as risk assets by institutional investors. If fear spreads across financial markets, capital could temporarily flow out of digital assets.
Markets Already Showing Signs of Stress
The warning arrives during a fragile moment for global markets. Crypto traders have been watching Bitcoin struggle to maintain strong upward momentum, while Ethereum is hovering close to key liquidation levels.
Meanwhile, traditional markets are also showing signs of pressure. Major U.S. stock indices—including the Nasdaq Composite, Dow Jones Industrial Average, and S&P 500—have already posted pre-market losses. At the same time, the CBOE Volatility Index has climbed to 25.44, a level that signals rising anxiety among investors.
Cheong did not share specific price predictions or trading strategies. Still, his message was clear: traders and investors should pay close attention to geopolitical risks.
If tensions in the Middle East escalate further, the resulting shock to energy markets and global supply chains could quickly spill over into financial markets—including crypto.
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