Crypto and broader markets fell on Monday as the United States and Iran escalated threats against each other for a fourth week, sending oil prices soaring.
US President Donald Trump sent on Sunday to the daily Truth Social that the United States would “strike and destroy” Iran’s power plants, “starting with the largest first,” if the country did not open the Strait of Hormuz within 48 hours.
Iran he replied saying it would respond to any U.S. attack on its energy or water infrastructure with attacks on U.S. and Israeli assets in the Persian Gulf and threaten to completely close the Strait, one of the world’s most vital oil transport routes.
Bitcoin (BTC), long viewed by its supporters as a so-called “safe haven” asset like gold, dropped 1.8% in the last 24 hours to $68,160, rebounding from a low below $67,600 at the end of Sunday trading.
The fall in Bitcoin’s price caused a surge in liquidations in the cryptocurrency industry, resulting in $336.3 million disappearing from the market in the last day, of which almost a third of the volume, or $100 million, was due to failed long bets on Bitcoin, According to to CoinGlass.
Rachael Lucas, an analyst at cryptocurrency exchange BTC Markets, told Cointelegraph that cryptocurrencies “are currently trading flat rather than as a haven, with sentiment at historic lows and the Fear and Greed Index sitting deep in ‘extreme fear’ territory at 8.”
Oily cutlets, Asian markets fall
Stock markets across Asia also reacted to the mounting threats, with Australian and New Zealand markets falling 0.8% and Japan falling more than 4%.
The price At the beginning of trading on Monday, the price of crude oil briefly rose to just over $100 per barrel, then quickly dropped to $97.20. Since then, it has steadily increased to $99.30 at the time of writing.
Meanwhile, Brent crude, considered the benchmark for global oil purchases, he jumped to over $114 per barrel, but fluctuated below $113.
Lucas said that the future of cryptocurrency markets depends on the de-escalation of the war in Iran and the decisions of the US Federal Reserve.
She added that the spike in Brent crude prices “is fueling inflation expectations, and the likelihood of a Fed rate hike has increased from zero to 12.4% in one week.”
“This is a significant macro sell-off that cryptocurrencies will continue to reflect until there is clarity on both fronts,” she added.
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Lucas said that if the Iran war deescalates, “crypto will be one of the riskiest assets to recover most quickly. However, this conflict has no clear negotiation equivalent or a specific exit timeline, making it difficult to determine such an outcome in the near future.”
She added that $68,000 is an “immediate level” to watch if Bitcoin has support, and $65,800 is “another significant support if it gives way.”
“And the upside is that Bitcoin needs to recover to $71,500 before any recovery narrative becomes credible,” Lucas said.
She added that Bitcoin continues to have powerful institutional support, with a net inflow of $1.43 billion into Bitcoin exchange-traded funds this month.
“When sentiment is this low and the institutional infrastructure is this strong, history suggests that the foundations are being laid for economic recovery, even if the timing remains uncertain,” Lucas said.
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