A brief demonstration on Sunday did not survive contact with Monday.
Bitcoin fell 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 that cryptocurrencies had been trading in isolation since Saturday.
Sunday’s bounce to $68,000 following Khamenei’s confirmation has mostly been undone, and the market has returned to the mid-$66,000 range that preceded the attacks.
The broader crypto landscape was mixed. Ether fell 2.5% to $1,967, Solana fell 4.1% to $84 and XRP lost 3.6% to $1.36. The weekly figures show the real damage, with Solana falling 8.1% in seven days to lead losses among large companies.
Traditional markets told the story that cryptocurrencies anticipated. Brent crude rose as much as 13% at the open before settling around $77.50, still up 6.4%, the biggest jump since the Russian 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 US stock futures fell 0.7%. Gold rose to $5,350 an ounce.
The movement of oil is what matters most for the direction of cryptocurrencies in the short term. Higher energy prices directly fuel inflation expectations, delaying the timeline for Fed rate cuts, tightening liquidity conditions that drive risk asset prices.
But the situation remains fluid. Conflicting reports emerged on Monday about whether Iran is seeking to resume nuclear talks with the United States. The Wall Street Journal reported a new push to negotiate, while Iran’s national security chief, Ali Larijani, said the country will not negotiate.
Earlier Sunday, Trump said the bombing campaign will continue until the goals are achieved, although The Atlantic reported that he agreed to speak with Iran’s new leadership.
Meanwhile, some cryptocurrency traders say additional downside risks to the market could be limited.
“Given that Iran has been isolated from global financial markets for quite some time, we believe the downside risk is limited,” said Jeff Mei, chief operating officer of BTSE.
“Some have been concerned about oil prices and their potential impact on inflation, but the world has become less dependent on Iranian oil and increased supply from OPEC and the United States should be enough to stabilize prices.”
Whether this turns out to be correct depends on whether the Strait of Hormuz is reopened and how long it takes to achieve Trump’s “goals.” Until both questions are answered, cryptocurrencies are being traded as a risk asset in a world that is becoming riskier.
