Cryptocurrency markets started the week with relatively modest losses despite heightened tensions in the Middle East over the weekend. Notably, Bitcoin’s price responded to the latest regional geopolitical developments with greater resilience compared to commodities like oil or traditional equities.
Geopolitical risks roil global markets
Following the US Navy’s seizure of an Iranian vessel over the weekend, Tehran tightened its control over the Strait of Hormuz. These moves have put war risk premiums—which had been declining for three weeks—back at the forefront for markets. After Iran announced on Friday that the strait was “completely open,” the S&P 500 closed at a record high, sparking optimism in emerging markets. However, the weekend’s developments triggered renewed volatility in energy prices and reined in global risk appetite.
The price of Brent crude soared as high as $95.50 per barrel, while European natural gas futures shot up by 11%. In the United States, S&P 500 futures dropped 0.6%, with European stock indexes also expected to open down 1.2%. Gold retreated 0.8% to $4,790, and the US dollar regained its status as a safe-haven asset.
Bitcoin and major cryptocurrencies steady amid tension
On Monday morning, Bitcoin hovered around $74,335, marking a 1.6% decline over the preceding 24 hours but a 4.8% rise for the week. According to CryptoAppsy, Bitcoin navigated the weekend’s volatility and the fresh Middle East risks with markedly less turbulence than traditional financial markets.
Among other major cryptocurrencies, losses remained moderate. Ether dropped 2.6% to $2,272, Solana slipped 1.5%, and BNB held steady at $618. The top ten cryptocurrencies mostly edged lower, but none registered losses above 3%.
“This is the fourth major wave of Iran-driven risk that crypto has absorbed since the conflict began, and the scale of the sell-offs has visibly contracted. In previous episodes, Bitcoin saw sharper drops, but now price reactions are less pronounced when compared to oil and stocks.”
Crypto and traditional markets diverge
Analysts point out that the impact of geopolitical risks on crypto prices appears to be diminishing. This could suggest that traders who considered selling on Iran-related headlines have already exited, or that spot ETFs are providing stronger market support. As a result, a new equilibrium is replacing the weekend volatility that used to stem from derivatives trading.
All eyes are also on whether the yield on the US 10-year Treasury note will remain around 4.27%, and how the strength of the dollar could influence Bitcoin prices. The historical correlation between crypto and equities may weaken further, especially during periods dominated by geopolitical shocks.
If Bitcoin continues to hold above $74,000 during European trading hours and the situation in the Strait of Hormuz deteriorates, the cryptocurrency’s reputation as a “geopolitical shock absorber” could gain further credence. Conversely, if prices fall below $73,000 on renewed Iran headlines, Bitcoin’s resilience in times of crisis may face greater scrutiny.
