Warnings from a Chinese Bitcoin Whale: “The Strait of Hormuz Issue Is Being Underestimated—Be Careful”

Despite rising geopolitical risks in global markets, the continued rise in risky assets signals a serious vulnerability, according to some analysts.

Bitcoin whale Garrett Jin stated that the Strait of Hormuz crisis has been seriously underestimated by the market and that a solution has yet to be found.

According to Jin, the fact that Brent oil prices are trading around $103 while the S&P 500 index is reaching record highs is one of the clearest indicators of the disconnect in the markets. According to Goldman Sachs Prime Brokerage data, the global short/long ratio rose to 7.6:1 in March, marking the fastest net sell-off in 13 years. The 7.1% rise in a single day in the bank’s basket of the 50 most shorted stocks following the ceasefire announcement, according to analysts, points to a classic “short covering” movement rather than strong buying appetite.

During the same period, trend-following funds (CTAs) directed record levels of capital into US equities, the “Big Seven” (major technology stocks) recovered 20% from their March 30 lows, and the NASDAQ Composite index recorded its longest winning streak since 1992.

However, Jin argues that the fundamental assumptions supporting this rise have not materialized. Expectations such as the reopening of the Strait of Hormuz, falling oil prices, declining inflation, and a Federal Reserve interest rate cut have all failed to materialize.

Indeed, recent developments support this view. After Iran announced on April 17th that the strait was “fully open,” Brent oil prices fell by 9% to $90. However, less than 24 hours later, the Iranian Revolutionary Guard opened fire on oil tankers and declared that “every ship will be hit,” forcing at least nine tankers to turn back. Today, it was reported that Iran fired on three more ships and seized two others. These developments have led to interpretations that a de facto two-way blockade has formed between the US and Iran, while Brent oil has risen again to $103.

Risks are also increasing in the global logistics sector. According to the CEO of German shipping giant Hapag-Lloyd, rebuilding the maritime shipping insurance system will take at least 6-8 weeks. Furthermore, events such as Israel’s attacks on the South Pars natural gas field, Iran’s targeting of the Ras Laffan LNG facility in Qatar, and damage to industrial infrastructure in the UAE are said to have caused damage to energy infrastructure that could last for months or even years.

According to the analyst, this indicates that despite seemingly high risk appetite, systemic vulnerabilities are steadily increasing.

*This is not investment advice.