The sudden escalation in Middle East tensions over the weekend triggered sharp moves across global markets, with Bitcoin plunging below the $100,000 mark for the first time since May.
The drop followed a surprise U.S. airstrike on Iranian nuclear facilities and a retaliatory vote by Tehran’s parliament to authorize the closure of the Strait of Hormuz, a critical energy chokepoint.
According to Coinglass data, more than $1.79 billion in crypto positions were liquidated since Friday, with nearly 70% of those on the long side. Bitcoin alone tumbled as much as 4.2% to hit $98,300 late Sunday before recovering about 3.1% in early Asia trading.
Ethereum fell 17% over the weekend but showed a similar relative bounce, rising 6.75% after weekend lows. The leading altcoin is down 21% since the local high of $2,877 mid-month.
The broader sell-off accentuated the sensitivity of risk assets to geopolitical shocks, especially with leverage levels in crypto markets still elevated. “The fact that nearly a billion dollars was flushed out so quickly suggests many traders were positioned for relative stability, not sudden escalation,” one derivatives trader told CryptoSlate.
In traditional markets, crude oil prices surged on fears of disruption to global energy flows. Brent futures hit an intraday high of $81.40, a five-month peak, before paring gains to settle around $77.73, still up 0.93% on the day. WTI crude followed a similar trajectory, peaking at $78.40 before easing back below $75. Analysts attributed the pullback to the fact that shipments are currently still flowing through Hormuz.
“Current escalation could spiral Brent toward $100, with $120 increasingly plausible if Hormuz is actually blocked,” Sugandha Sachdeva of SS WealthStreet told Reuters.
Gold, often a go-to in times of crisis, defied expectations by slipping 0.4% to $3,355/oz, while futures on COMEX were down 0.5% at $3,370. Traders pointed to a stronger U.S. dollar, buoyed by haven flows, as a key reason for gold’s underperformance. “The USD uptick pegged gold back despite risks,” said Tim Waterer, chief market analyst at KCM Trade.
S&P 500 futures dipped 0.3% in premarket trade Monday, clawing back from steeper overnight losses. The relatively muted equity reaction suggests that investors still view the conflict as a regional flare-up rather than a broader geopolitical crisis. Yields on U.S. Treasuries were little changed, reinforcing that view.
All eyes will be on the US market opening later today to see whether oil and gold continue to retreat alongside strength from equities and Bitcoin.
Oil disruption fears continue
Iran’s closure of the Strait of Hormuz remains a threat, not a fact. While its parliament has approved the move, shipping through the channel is expected to continue Monday afternoon. Still, the Strait handles about 20% of the world’s oil shipments, and even a temporary disruption could ripple through energy markets and inflation expectations worldwide.
The White House has threatened further force if Iran retaliates. Trump called for negotiations while also stoking the flames, declaring a need to “Make Iran Great Again.” The market will closely watch any further military or diplomatic developments this week. With Federal Reserve Chair Jerome Powell scheduled to speak twice this week, traders are also weighing whether geopolitical uncertainty might influence the central bank’s rate path.
Bitcoin’s rapid selloff and partial rebound offer a stark reminder of its evolving role as a geopolitical barometer.
Bitcoin is currently reacting less to macro data than it is to missiles in the Middle East.
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