A U.S.-linked escalation in geopolitical tensions is reinforcing dollar strength by shifting the economic burden of higher energy costs onto Europe and Asia, tightening global liquidity conditions that are weighing on crypto markets, according to a report from HTX Research.
The report said the current market reaction is being driven less by traditional risk-off dynamics and more by a supply-side energy shock centered around the Strait of Hormuz, a critical transit route for global oil flows. While oil prices have risen on supply risk, the impact has been unevenly distributed across regions.
Europe and Asia, which rely more heavily on imported energy flowing through the Strait, are facing sustained cost pressure that is feeding into weaker growth and tighter financial conditions. By contrast, the United States, with relatively stronger energy independence and financing conditions, is less exposed to the same degree of economic strain.
Dollar Strength Reflects Uneven Global Impact Of Energy Shock
This divergence is supporting demand for dollar-denominated assets, even as the geopolitical risks originate from U.S. policy decisions. The report noted that capital tends to flow toward the relative stability of the U.S. financial system under such conditions, reinforcing dollar strength.
At the same time, higher oil prices are acting as a global tax on cash flows, increasing living costs and forcing institutions to reassess inflation expectations, interest rates and portfolio allocations.
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Liquidity Compression Weighs On Crypto Markets
The tightening in global liquidity is emerging as the key transmission channel into digital asset markets. Rising yields and persistent inflation expectations are limiting the ability of central banks to ease policy, reducing the availability of capital for high-volatility assets.
The report emphasized that this environment is not a classic safe-haven phase. Instead of gold and defensive assets rallying, yields have risen while risk assets, including Bitcoin (BTC), have come under pressure. This reflects a liquidity contraction rather than a rotation into safety.
Bitcoin may remain relatively resilient due to its liquidity and institutional positioning, but the report said that does not imply immediate upside. Ethereum (ETH) remains more dependent on risk appetite and capital inflows, while most altcoins are more exposed to declining liquidity and speculative demand.
Further, the report said the market has shifted into a phase defined by defense and repricing, where the direction of oil, yields and dollar liquidity will continue to shape crypto performance.
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