Bitcoin back above $100,000 on muted US-Iran reaction, US equities rally

With reports of US airstrikes on Iran nuclear facilities emerging on Sunday, crypto markets declined sharply amid rising geopolitical tensions, hurting demand for speculative digital assets.

Despite falling to monthly lows over the weekend, and crucially below the key level of $100,000, Bitcoin has found support early in today’s session, trading +0.32% higher at around ~$101,319.

US equities also trade higher, with the Dow Jones 30 rallying by +0.16, the Nasdaq 100 by +0.10%, and the S&P 500 by 0.26% respectively.

Read more: Yen slides on oil supply jitters after US attack on Iran

• Developing tensions in the Middle East, most recently renewed by successive US airstrikes on Iranian nuclear facilities, are boosting market nervousness and a pervasive attitude of risk aversion within financial markets
  
• Despite recent developments, the reaction in today’s session remains muted, with the Strait of Hormuz, a key oil supply route, and its potential closure by Iran, being eyed by markets
  
• Bitcoin’s recent sell-off renews questions about its legitimacy as a ‘safe-haven’, showing some clear vulnerabilities to geopolitical tensions, similar to other risk assets

Having fallen by some 8% from highs made in early June, crypto markets have been under pressure recently, owing to a prevailing theme of low risk appetite.

While uncertainty on tariffs and recent monetary policy decisions by the Federal Reserve have contributed to recent bearish momentum, the most immediate cause of recent selling pressure is overwhelmingly current developments in the Israel-Iran conflict, with the United States becoming increasingly involved.

Able to react immediately to news of the United States’ airstrikes on Iranian nuclear facilities, with crypto markets famously open 24/7, Bitcoin pricing fell to lows of $98,385 on Sunday, crucially below the often-eyed key level of $100,000. Ethereum also fell to new lows as reports broke, reaching new lows of $2117 before retracing towards the end of Sunday’s session..

Otherwise, many altcoins such as XRP, Solana, and ADA also saw sharp declines in value.

If nothing else, recent price action highlights how crypto remains vulnerable to geopolitical risk, similarly to other risk assets. While some hail Bitcoin as a ‘safe-haven’ store of wealth, it would seem that, at least concerning the current conflict, crypto is much more closely correlated to risk assets than perhaps some would like.

With recent escalations in Middle East tensions occurring over the weekend, markets could only speculate about what the complete reaction would be at the open today.

The answer has been somewhat underwhelming, with most US equities virtually unchanged for the day, and only minor uptake in safe-haven assets.

Markets now eye new developments within the conflict, especially surrounding reports suggesting the closure of the Strait of Hormuz, part of Iran’s national waters and a key waterway for global crude oil supply, which remains a possibility should the conflict escalate further.

Especially with the potential for stagflation cited as one of the reasons rates were maintained in the Federal Reserve’s most recent decision, disruption to the global oil supply and the likely rise in crude oil prices could have a knock-on effect on monetary policy and, therefore, US equities.

Read previous analysis on WTI markets: Crude Oil News: WTI falls to $71.37 on muted Israel-Iran impact