A brief gathering on Sunday did not survive contact on Monday.
Bitcoin slipped to $66,702 in early trading on Monday, down 1.1% in the past 24 hours, as traditional markets reopened and began pricing in the US-Iran conflict in which the crypto had been trading in isolation since Saturday.
Sunday’s rebound to $68,000 following Khamenei’s confirmation is now largely muted, with the market back in the $66,000 average range that preceded the strikes.
The broader crypto picture was mixed. Ether fell 2.5% to $1,967, solana fell 4.1% to $84, and XRP fell 3.6% to $1.36. The weekly figures depict the actual damage, with Solana down 8.1% over seven days, leading losses among the majors.
Traditional markets told the story crypto expected. Brent crude jumped 13% at the open before settling around $77.50, still up 6.4%, the biggest rise since Russia’s invasion of Ukraine in 2022.
The Strait of Hormuz, through which about a fifth of the world’s oil flows, is effectively closed, according to Bloomberg. Asian stocks fell 1.4% and U.S. stock futures fell 0.7%. Gold rose to $5,350 an ounce.
The oil movement is what matters most for the near-term direction of crypto. Rising energy prices directly fuel inflation expectations, pushing back the Fed’s timetable for rate cuts, which tightens the liquidity conditions that determine risk asset prices.
But the situation remains fluid. Conflicting reports emerged Monday over whether Iran was seeking to resume nuclear negotiations with the United States. The Wall Street Journal reported a new push for negotiations, while Iran’s national security chief, Ali Larijani, said the country would not negotiate.
Earlier Sunday, Trump said the bombing campaign would continue until the objectives were achieved, although The Atlantic reported that he had agreed to talks with Iran’s new leaders.
At the same time, some crypto traders say further downside risks to the market may be limited.
“Given that Iran has been isolated from global financial markets for some time, we believe the downside risk is limited,” said Jeff Mei, chief operating officer at BTSE.
“Some are concerned about oil prices and their potential impact on inflation, but the world has turned its attention away from Iranian oil and increased supply from OPEC and the United States should be enough to stabilize prices.”
Whether this proves correct depends on whether the Strait of Hormuz reopens and how long it takes to achieve Trump’s “goals.” Until these two questions are answered, crypto is considered a risk asset in a world that is becoming increasingly risky.
