- A rise in geopolitical tensions between the US and Iran has caused Bitcoin to fall below the $100,000 mark.
- The fall represents a substantial fall in Bitcoin prices, having hit higher levels in early March.
- Ethereum plunges more than 10%, and other altcoins such as XRP and Solana also experience considerable losses.
Bitcoin’s price plunged below the critical $100,000 mark on Sunday, falling to a low of $99,500. The cryptocurrency touched an all-time high at the beginning of the year as it surged to a peak of $111,970. However, the continuous geopolitical crisis between the U.S. and Iran has had a powerful impact on the market mood. Bitcoin currently stands at $99,563, marking a decline of nearly 7% for the week.
The downward trend particularly worsened following recent remarks made by U.S President Donald Trump, who called upon Iran to unconditionally surrender and also issued a direct threat to the Iranian leadership. These came after last week’s Israeli airstrike in Iran, which raised market uncertainty further. The fall of Bitcoin below its recent peak of over $100,000 is a significant first in over a month for the asset, unlike the steep incline in its recent performance.
As of May 8, Bitcoin had risen to over $100,000, recovering intensely since it dipped below that mark in early 2023. It returned to the $110,000 mark on June 11, causing optimism that it would set a new all-time high. However, escalating geopolitical tensions triggered bearish sentiment among investors, pushing Bitcoin lower.
Oil Market Warnings and Inflation Risks Intensify
The geopolitical risk impacted cryptocurrencies and shook up global commodity markets in general and oil in particular. The Strait of Hormuz, which Oman and Iran sandwich, is the most crucial sea gateway through which around 20% of the world’s oil traffic is transited. It was reported that Iranian authorities were contemplating shutting down the Strait due to the U.S. military action and that oil prices would increase radically.
According to the Kobeissi Letter, more than 50 oil tankers rushed to leave the Strait following the U.S. airstrikes, and market watchers forecasted a significant drop in oil supply. JPMorgan stated that in the event of an oil price shock caused by supply shocks, it could rise as high as $120-$130 per barrel, a surge that would likely increase inflation in the U.S. to 5%, a high not seen since March 2023.Â
This scenario might force the Federal Reserve to tighten monetary policies further, which will have wider implications in the global markets, including the cryptocurrency market.
Altcoins Show Broader Market Strain
The ripple effect from Bitcoin’s decline has reached the wider crypto market, and many large altcoins have faced huge losses. Ethereum, being among the best-performing altcoins, experienced a steep decline of over 10% to a price of $2,171. This is its lowest level since earlier in May.Â
Ethereum has similarly followed the depreciation of Bitcoin and has fallen victim to the overall market crash. XRP, commonly considered one of the most secure altcoins, dropped 6% as well, to reach its lowest mark since April 10, at $1.935. Two other popular altcoins, Solana and Dogecoin, also felt the dip, reaching their lowest price in more than two months, with Solana at around $127 and Dogecoin at around $0.147.
