The United States and Iran exchanged military strikes this week, escalating a conflict that had simmered for months. The fresh violence dashed remaining hopes for a diplomatic solution over the Strait of Hormuz, and Bitcoin dropped below $73,000 — its lowest level in weeks.
Strikes send traders scrambling
US forces hit Iranian positions in the region on Wednesday, and Iran retaliated with a barrage of missile and drone attacks against American assets. The exchange marks the most direct military confrontation between the two countries since 2020. Markets reacted immediately. Oil spiked. The S&P 500 slid. And crypto, often billed as a non-correlated asset, fell in lockstep. Bitcoin tumbled from $77,000 to under $73,000 within hours. The drop wiped out gains from earlier this month.
Hormuz deal slips away
For weeks, back-channel talks had raised hopes for a renewed agreement keeping the Strait of Hormuz open — a critical chokepoint for global oil shipments. Those talks are now effectively dead. The US administration paused negotiations after the first round of strikes, and Iran's foreign ministry said there was 'nothing left to discuss.' The strait's disruption threatens to push energy prices higher, which historically tightens liquidity in risk assets including crypto.
Crypto feels the heat
This isn't the first time crypto has taken a hit from Middle East tensions, but the magnitude of the drop surprised some traders. The move below $73,000 broke a support level that had held since mid-May. Altcoins suffered even larger percentage losses. Ethereum fell past $3,800. The total crypto market cap shed about $120 billion in two days. The selloff was broad and fast — not a panic, but a steady grind lower as buyers stepped aside.
The Pentagon has not ruled out further strikes. The price of oil is now the key metric for crypto traders: if Brent crude stays above $90, risk assets are likely to stay under pressure. The next major test for Bitcoin comes if it fails to reclaim $73,000 by Monday's close. Below that, the next floor sits around $68,000 — a level that held during the selloff in March. No one's calling a bottom yet. But with the Hormuz door shut and both sides still armed, the market is bracing for the worst.
