Bitcoin Shortly Slips Below $100K as Iran Tensions Threaten Strait of Hormuz
Bitcoin’s price slid below the six-figure mark to $98,200 following escalating tensions in the Middle East, as Iran’s parliament advanced legislation to shut down the Strait of Hormuz—a move that, if finalized, could severely disrupt global oil flows. The proposal, in response to reported U.S. strikes on Iranian nuclear facilities, now awaits final approval from Iran’s Supreme National Security Council (SNSC).
The geopolitical threat has rattled financial markets and sent shockwaves through the crypto sector. Ethereum dropped 4% to under $2,200, and XRP fell beneath the $2 threshold for the first time in months. In total, over $950 million in leveraged crypto positions were liquidated in 24 hours as traders fled risk.
Why Hormuz Matters
The Strait of Hormuz is the world’s most important energy chokepoint, responsible for about a quarter of global oil shipments. Its potential closure would instantly tighten global energy supply, likely pushing oil prices above $100 per barrel.
Such a spike could trigger inflation shocks across advanced economies. Higher energy costs would raise consumer expenses and industrial input prices, disrupting corporate margins and household spending alike.
Ripple Effects on Crypto
The crypto market—often treated as a high-risk asset class—reacts strongly to macroeconomic stress. Rising oil prices can reignite inflation, forcing central banks to keep interest rates higher for longer. If the Federal Reserve hints at more tightening to maintain its 2% inflation goal, real yields could climb—historically a bearish setup for Bitcoin, which offers no yield.
Furthermore, stronger real yields tend to strengthen the U.S. dollar, and a rising Dollar Index often correlates with weakening crypto prices. Analysts warn that Bitcoin could slide to $95,000 if this dollar momentum accelerates.
Leverage, Liquidations, and Volatility
The latest downturn also exposes the structural fragility within crypto markets. High leverage levels among traders amplify volatility, as large price swings trigger margin calls and forced liquidations. This feedback loop has intensified recent losses, with a majority of liquidations hitting long positions in Bitcoin and Ethereum.
Concurrently, traditional market indicators such as the VIX and Treasury spreads point to growing risk aversion—conditions that typically weigh on speculative assets.
What to Watch Next
Markets remain on edge with three critical developments in focus:
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Final SNSC Decision – Approval of the Hormuz closure would confirm Iran’s move toward direct oil disruption.
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Crude Oil Prices – A breakout above $100/barrel could compound inflationary pressures.
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Federal Reserve Commentary – Any signal of delayed rate cuts or further tightening could spook markets further.
Until clarity emerges on these fronts, crypto is likely to remain under pressure. The looming Hormuz shutdown underscores how deeply entangled digital assets have become with geopolitical and macroeconomic currents—marking a new phase of vulnerability for the crypto market.