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Garrett Jin, an investor known as a “Chinese whale” in the cryptocurrency market, commented on the impact of the Strait of Hormuz crisis on global financial markets. Sharing his thoughts on social media, Jin stated that pressure on risky assets could continue until a reliable way to reopen the strait emerges.
According to Jin, the fact that Brent oil was priced at around $85 per barrel before March 9 indicated that the market was pricing in limited supply disruptions that could last from a few days to two weeks. However, the rise in oil prices to $119.5 reveals that markets are beginning to consider the possibility of supply disruptions much more seriously. Jin stated that the current pricing does not yet fully reflect the exact duration of the supply disruption, and the market is only now beginning to price in this period.
According to the analyst, the Strait of Hormuz crisis is impacting financial markets through multiple channels. This process has not only led to a decrease in risk appetite but has also caused institutional-level changes in correlations between asset classes, geographical risk distribution, and how markets price the duration of extreme events. Jin stated that even if the crisis subsides, it could take three to six weeks to re-establish insurance and risk management mechanisms.
According to Jin, a positive scenario for risky assets would be the reopening of the Strait of Hormuz, a ceasefire resulting from a diplomatic summit, or similar positive developments. On the other hand, Jin noted that if diplomatic efforts fail and the strait remains closed for an extended period, there is no clear historical price movement for the markets to reference, and therefore, uncertainty could remain high.
*This is not investment advice.
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