Author: Orange Knowledge Math
01. War as a "Pricing Engine" for Global Assets
The conflict between the US, Iran, and Israel on February 28 was not essentially a localized military incident, but rather a rapidly operating "global pricing machine."
The US and Israeli strikes against Iran, and Iran's retaliation against the Gulf states, caused the conflict to spread to multiple locations, including the UAE, Bahrain, and Qatar, within hours. The UAE's air defense system intercepted numerous missiles and drones, but falling debris still caused civilian casualties and port fires, and infrastructure in Dubai and Abu Dhabi was affected.
The UAE, a country known for its "safety," "neutrality," and "free flow of wealth," is beginning to be repriced by war.
The market's reaction path is very typical: first energy, then shipping and insurance, followed by stocks, bonds, currencies, and risk assets including cryptocurrencies.
War doesn't require destroying cities; it only requires eliminating "certainty" for asset prices to begin to rewrite themselves.
02 Hormuz: The "choke point" of 20% of the world's oil supply is blocked
The Strait of Hormuz handles about one-fifth of the world's seaborne oil shipments. If shipping is disrupted, the market faces not just a simple reduction in supply, but also unpredictable delivery times.
Following the escalation of the conflict, several energy companies suspended shipments through the strait, tankers were attacked and ships were stranded, shipping companies were forced to detour, and Brent crude oil prices quickly jumped above $80. The rise in oil prices has strong symbolic significance, but what truly altered the logic of global trade was the hesitation surrounding forward contracts and the tightening of trade financing.
When traders start worrying about whether the goods will arrive on time, the global supply chain transforms from a price issue into a time issue. For the industrial system, this uncertainty is far more damaging than oil prices themselves.
03 The first to be exposed was insurance.
During wartime, shipping insurance premiums often change faster than freight rates themselves. War risk premiums on the Gulf route rose by about 50% in a short period, increasing the cost of a single voyage by $100,000 to $200,000. This cost does not ultimately remain on the shipping company's books but is passed on through trade and logistics.
The transmission mechanism will directly lead to:
The landed cost of imported goods has increased.
Raw material prices for manufacturing industries have been passively raised.
Profit margins in cross-border trade are being squeezed.
This is a form of "delayed inflation." It won't be immediately reflected in statistics, but it will appear in the prices of everyday goods, appliances, and industrial products over the next few months.
04 Global movement of people was put on hold
Following the conflict, several countries temporarily closed their airspace, and airlines in Europe and Asia canceled or rerouted routes through the Gulf, leaving hundreds of thousands of passengers stranded. The disruption to flights in Dubai, one of the world's busiest international air hubs, meant a sharp drop in the efficiency of east-west travel globally.
The more than 3.8 million tickets for returning home are just the tip of the iceberg; the deeper impacts include business travel delays, slowed progress on cross-border projects, and rising air freight costs for high-value-added goods. One of the most important infrastructures of globalization has demonstrated high vulnerability in the face of war.
05 The Standard Playbook in Financial Markets: Risk-off
The energy shock quickly translated into macroeconomic expectations. High oil prices imply increased inflationary pressures, and rising inflation expectations reduce expectations of interest rate cuts, passively shifting the yield curve upward.
The market then entered a typical risk- off state: funds flowed to bonds, gold and inflation-sensitive commodities (such as energy, precious metals, industrial metals, agricultural products, etc.) , while equity assets came under pressure.
Since growth stocks and the AI sector rely on long-term cash flows, the present value of future earnings drops rapidly when the discount rate rises again. This is why the Nasdaq's high-valuation sectors were the first to come under pressure before and after news of the conflict broke.
06 Crypto Market: Fully Integrated into the Global Macro Pricing System
If we turn back the clock three years, the impact of geopolitical conflicts on the crypto market was mostly at the emotional level; however, in recent geopolitical conflicts, the reaction path of on-chain assets has been almost synchronized with that of traditional financial markets.
(1) BTC and ETH
Over the weekend when news of the conflict broke, before traditional markets had even opened, BTC had already begun to fall, dropping from approximately $68,000 to around $64,000, while ETH saw an even steeper decline, exceeding 8% at one point. Simultaneously, the on-chain derivatives market experienced massive deleveraging, with over $1 billion in contract liquidations across the network within 24 hours, open interest declining rapidly, and funding rates turning negative.
The logic behind this is entirely consistent with the Nasdaq's decline amid expectations of high interest rates: when the market begins to repric the path of interest rate cuts, the first assets to be sold off are always those most sensitive to liquidity. Unlike gold, BTC's core pricing anchor remains dollar liquidity, not safe-haven demand.
However, compared to traditional risky assets, the crypto market exhibits a distinct characteristic: faster recovery. When stock index futures stabilized and oil price gains narrowed, Bitcoin rebounded in tandem. The fundamental reason for this V-shaped structure lies in the absence of trading time restrictions and cross-market clearing delays. In the face of sudden macroeconomic events, the crypto market became the first asset class globally to complete the "price discovery-deleveraging-rebalancing" process.
(2) Stablecoins
If Bitcoin reflects changes in risk appetite, then stablecoins reflect the flow of USD on-chain. Following the escalation of the conflict, on-chain transfers of USDT and USDC, as well as net inflows into exchanges, increased significantly. This is because when investors sell risky assets but do not leave the market, funds remain in stablecoins awaiting reallocation. Therefore, changes in stablecoin market capitalization are essentially a reflection of on-chain "cash positions."
(3) Tokenized Gold
Tokenized gold and on-chain RWA can continue to price traditional assets when traditional markets are closed. Over the weekend, PAXG and XAUT traded at a premium, their price movements closely mirroring the opening direction of spot gold. This suggests that on-chain assets are becoming a "shadow price discovery mechanism" for traditional assets.
(4) Summary
Gold remains the ultimate safe-haven asset.
US Treasury bonds remain the anchor of global liquidity.
BTC is the most beta asset sensitive to dollar liquidity.
Stablecoins are on-chain US dollar cash.
On-chain RWA is a time-extended market for traditional assets.
On-chain markets are no longer just a highly volatile, marginal asset class, but are beginning to assume the same functions as traditional financial markets—risk pricing, liquidity buffering, and cross-market arbitrage. This structural change is particularly evident in sudden macroeconomic events such as geopolitical conflicts.
07 China provides more certainty for global assets
When the three arteries of globalization—energy, shipping, and aviation—are simultaneously impacted, what the market is really looking for is not "the asset that has risen the most," but a structure that can provide certainty.
In this round of conflict, China's role is not essentially that of a safe-haven market in the traditional sense, but rather a support layer in global volatility.
(1) China: The “Resilience Premium” Brought About by Supply Stability
When the Hormuz risk drives up energy and freight costs, the real problem facing global manufacturing is not cost, but delivery uncertainty.
China's unique characteristic lies in its continued possession of the world's most complete industrial system. Data from the World Bank and the United Nations Industrial Development Organization shows that China's manufacturing value added has long accounted for approximately 30% of the global total, nearly double that of the second-ranked United States. This means that rising external transportation costs do not linearly translate into disruptions to domestic supply chains.
More importantly, there is a high concentration of production capacity for key industrial products. In fields such as new energy equipment, consumer electronics, and photovoltaic modules, China's global production share generally exceeds 60%. When European shipping routes are rerouted and shipping capacity in the Red Sea and the Gulf is strained, this localized manufacturing capability directly translates into order stability.
During the Red Sea crisis in 2024, global shipping prices surged by over 120%, but the delivery cycles for Chinese exports fluctuated significantly less than those in Southeast Asian manufacturing hubs. This less volatile supply capacity itself constitutes a premium.
While the world is repricing energy, China is pricing in “stable delivery capacity.”
(2) Hong Kong, China: A “Pricing Interface” in a Turbulent Cycle
During periods of geopolitical conflict, what capital fears most is not a price drop, but the inability to exit. Hong Kong remains one of the few markets in Asia that simultaneously possesses a US dollar clearing system, an offshore RMB center, direct connections to Chinese assets, and common law asset disposal pathways.
In 2023-2024, the average daily turnover of the Hong Kong stock market remained at around HK$100 billion, with continued two-way flows of funds between the north and south. The number of CIPS ( Cross-border Interbank Payment System) participants exceeded 1,400, covering more than 100 countries and regions. This means that even when global volatility rises, funds can still be allocated and exited through a mature market system.
In the realm of virtual assets and RWA, with the establishment of Hong Kong's licensed trading platform system and the advancement of projects such as tokenized bonds and tokenized funds, Hong Kong is forming a new financial structure: traditional assets can compliantly enter the on-chain market, while on-chain assets can be liquidated under the traditional legal system.
During periods of geopolitical conflict, this structure provides continuous pricing capabilities across time zones. When European and American markets are closed for the weekend, Hong Kong continues to trade; when traditional markets have settlement time differences, the on-chain market continues to price.
This makes Hong Kong a time interface between traditional finance and on-chain finance.
A new asset pricing anchor is forming.
This conflict has changed more than just energy prices or flight routes; it has also led to a rethinking of global capital’s understanding of “security and liquidity.”
Future asset pricing centers must possess three capabilities simultaneously:
An industrial base to support production, a financial system to facilitate transactions, and a market structure to provide continuous pricing.
When the world is pricing uncertainty, whoever can provide certainty will become the new anchor.
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