White House Iran Policy Wobbles: Geopolitical Uncertainty Rises, Crypto Market Must Beware of Risk Asset Pressure

Inside the White House, disagreements over Iran policy have emerged. According to the latest reports, the Trump administration is weighing options regarding military action against Iran, with senior officials like Vice President Pence advocating for trying diplomatic measures first, while President Trump himself leans toward authorizing military strikes. This policy uncertainty is becoming a new source of pressure for global risk assets in the near term.

Policy Battles Inside the White House

Two opposing viewpoints

There are clear policy divisions within the White House:

• Hawkish stance: Trump favors taking new military action against Iran as a “retaliation” for recent unrest and activities
• Moderate stance: Led by Vice President Pence, senior officials advocate for attempting diplomatic solutions first, through negotiations based on Iran’s proposed nuclear agreement

This internal balancing reflects the complexity and uncertainty of the Trump administration’s Middle East policy.

Why this matters to the crypto market

Rising geopolitical risks often have cascading effects on the crypto market:

• Risk asset pressure: Cryptocurrencies, as risk assets, tend to be pressured when geopolitical uncertainty increases. Investors tend to avoid risk and shift toward safer assets
• Dollar movement: Developments in the Middle East could influence the strength of the US dollar, which in turn affects dollar-denominated crypto assets
• Market sentiment volatility: Policy uncertainty can increase market sentiment swings, leading to short-term sharp price fluctuations
• Liquidity changes: In high-risk environments, institutional investors may reduce their crypto allocations, impacting liquidity

Two Possible Policy Directions

If military action is taken

If Trump ultimately opts for military strikes against Iran, it could trigger:

• Significant declines in global risk assets
• A rise in safe-haven sentiment, strengthening gold and the US dollar
• Short-term pressure on the crypto market, but potential long-term opportunities due to dollar policy adjustments

If diplomatic efforts are prioritized

If the White House adopts a diplomatic approach, restarting negotiations on the Iran nuclear deal, it could lead to:

• Eased geopolitical risks, giving risk assets a breather
• Improved market sentiment, potentially supporting the crypto market
• Relative stability in global economic outlooks, conducive to risk asset recovery

Signals to Watch Moving Forward

Market participants should closely monitor:

• Whether the White House issues official statements clarifying Iran policy direction
• Whether the US and Iran initiate formal diplomatic contacts
• Signs of military escalation in the Middle East
• Reactions in international oil prices (a key indicator of geopolitical risk)

Summary

The White House’s weighing of Iran policy reflects the current complexity of the global geopolitical environment. While this is primarily a matter of US foreign policy, its outcomes will directly impact the performance of global risk assets. As a risk asset class, the crypto market needs to stay alert to developments in this uncertainty. In the short term, clarifying the policy direction will be more important than the policy itself, as markets fear uncertainty the most. It is recommended that crypto market participants remain cautious during this period, closely follow policy signals, and prepare for volatility in risk assets.