The brief sigh of relief that had characterised Sunday did not survive the first impact with reality on Monday. As traditional markets reopened, the escalation of the conflict between the United States and Iran began to reflect heavily on digital assets, which had traded in uncertain isolation since Saturday.
The Cryptocurrency Retreat
In the early hours of Monday, Bitcoin slid to $66,702, marking a 1.1% decline over the past 24 hours. Sunday's rebound towards $68,000, fuelled by confirmations from Supreme Leader Khamenei, has been almost entirely reabsorbed. The market has returned to settle in the mid-$66,000 range that preceded the attacks.
The overall picture of the crypto sector appears mixed, but trending downwards. Ether lost 2.5 per cent, falling to $1,967, while Solana suffered the hardest blow among the biggies, plummeting 4.1 per cent to $84 and racking up a weekly loss of 8.1 per cent. Even XRP was not unaffected, dropping 3.6% to settle at $1.36.
The shadow of oil and the closure of Hormuz
If cryptos anticipated the tension, traditional markets confirmed its severity. Brent literally jumped at the opening, touching 13% highs before settling around $77.50 (a net increase of 6.4%). This is the most significant leap since the Russian invasion of Ukraine in 2022.
The logistical data is particularly worrying: according to Bloomberg, the Strait of Hormuz, a vital passage where about a fifth of the world's oil transits, is effectively closed. This bottleneck has triggered a flight to safe haven assets, with Gold rising to $5,350 an ounce, while Asian stock markets (-1.4%) and US futures (-0.7%) have veered into the red.
Inflation and the Federal Reserve: The Link to Crypto
The movement of crude oil is the crucial indicator for Bitcoin's short-term direction. Higher energy prices directly fuel inflation expectations. This scenario forces the Federal Reserve to postpone the timing of interest rate cuts, tightening liquidity conditions that usually fuel high-risk (risk-on) asset prices.
Diplomacy or escalation? A fluid picture
The political situation remains extremely unstable and characterised by mixed signals. On Monday, contradictory news emerged about Iran's willingness to resume nuclear talks with the United States. While the Wall Street Journal has reported a new diplomatic effort to negotiate, Iran's national security chief, Ali Larijani, reiterated a hard line, declaring that the country does not intend to come to terms.
On the US front, President Trump said on Sunday that the bombing campaign would continue until targets were met, although The Atlantic reported on his openness to dialogue with the new Iranian leadership.
Outlook and risks
Despite the tense climate, some analysts maintain cautious confidence. Jeff Mei, Chief Operating Officer at BTSE, says downside risks may be limited:
"Given that Iran has been isolated from global financial markets for some time, we believe downside risk is limited. Although there are concerns about oil and inflation, the world has now weaned itself off Iranian crude. Increased supply from OPEC and the US should be sufficient to stabilise prices."
The immediate future of the market will depend on two key variables: the reopening of the Strait of Hormuz and the duration of Trump's military operation. Until then, cryptocurrencies will continue to trade as risk assets in a world that has suddenly become much riskier.
