Bitcoin fell to $66,702 in early Monday trading, a reversal of the weekend’s brief rally triggered by the confirmation of Ayatollah Ali Khamenei’s death, as traditional financial markets reopened and began pricing the escalating conflict between the U.S. And Iran.
Sunday’s surge to $68,000, reported by Moneycontrol and Cointelegraph, has largely unwound, with the cryptocurrency settling back into the mid-$66,000 range that preceded the U.S.-Israeli strikes on Iran. The broader crypto market mirrored the decline, with Ether dropping 2.5% to $1,967, Solana falling 4.1% to $84, and XRP losing 3.6% to $1.36. Solana led weekly losses among major cryptocurrencies, down 8.1% over the past seven days.
Traditional markets offered a starker assessment of the geopolitical risk. Brent crude oil surged as much as 13% at the open before stabilizing around $77.50, still representing a 6.4% increase – the largest jump since Russia’s invasion of Ukraine in 2022, according to Bloomberg. The Strait of Hormuz, a critical waterway for global oil transport, is effectively closed, further exacerbating concerns about supply disruptions.
Asian equity markets declined 1.4%, and U.S. Equity futures fell 0.7%. Gold prices climbed to $5,350 an ounce, reflecting a flight to safety among investors. The oil price surge is considered a key factor influencing the near-term direction of cryptocurrency, as higher energy prices contribute to inflationary pressures and potentially delay anticipated interest rate cuts by the Federal Reserve, tightening liquidity conditions for risk assets.
The situation remains highly volatile. Conflicting reports emerged Monday regarding Iran’s willingness to engage in renewed nuclear negotiations with the U.S. The Wall Street Journal reported a renewed push for talks, while Ali Larijani, Iran’s national security chief, stated the country would not negotiate. Former U.S. President Donald Trump, on his social media platform Truth Social, indicated the bombing campaign would continue until U.S. Objectives are met, though The Atlantic reported he has signaled openness to discussions with Iran’s new leadership.
Some crypto traders suggest that further downside risk for the market may be limited. Jeff Mei, chief operating officer at BTSE, stated, “Given that Iran has been isolated from global financial markets for quite some time, we believe that downside risk is limited.” He added that the world has adjusted to limited Iranian oil supply, and increased production from OPEC and the U.S. Could help stabilize prices.
But, the reopening of the Strait of Hormuz and the duration of Trump’s stated “objectives” remain unresolved. Until these questions are answered, cryptocurrency continues to trade as a risk asset in a significantly more uncertain global environment.
