Three Factors Drive Wall Street and Bitcoin Volatility

Tuesday marked the third straight losing session for Wall Street. Oil prices jumped after new U.S. strikes on Iran, and CNBC's Jim Cramer identified three forces that are keeping markets, including Bitcoin, volatile.

The Dow lost 419 points, while the Nasdaq fell 1%. These declines were driven by geopolitical shocks, stress in the bond market, and a hawkish new Fed chair. The 10-year Treasury yield increased to 4.79%.

Three Factors Shaking Wall Street

The first factor is Iran. Fresh U.S. strikes near the Strait of Hormuz drove Brent crude 4.6% higher to $95.70 per barrel on Tuesday evening. U.S. crude settled above $90 for the first time in more than a month.

Cramer noted that the pattern repeats each time Iran's Hormuz threat re-emerges as ceasefire hopes diminish.

The second factor involves the Federal Reserve. Chair Kevin Warsh has indicated he would increase rates even if it causes a recession.

Cramer likened Warsh to former Fed Chair Paul Volcker, another inflation hawk. Traders now see a 66% chance of a September rate hike, compared to about 40% a week ago.

The third factor is the president. According to Cramer, a provocative post about Iran reduces major indexes by about a quarter point. A real strike could lower markets by half a percent and push oil up by two percentage points. He describes this as a volatility premium with no set expiration date.

Cramer's team also cut back on data center exposure before the November election, concerned about political risk to AI stocks. They maintained core positions in Nvidia and Apple.

Bitcoin Also Under Pressure

The pressure has extended to digital assets. Bitcoin briefly fell below $77,000, mirroring Tuesday's broader risk-off move.

Investors reduced exposure in both stocks and cryptocurrencies. Ether fell alongside bitcoin as traders broadly reduced risk. Cramer's investment club increased cash holdings to over 15%, the highest in its 25-year history.

Cramer expects the volatility to persist until the Iran conflict subsides or the Fed's direction becomes clearer. The next major test comes Friday, when the August jobs report may further alter rate-hike expectations.