The cryptocurrency market saw a sharp decline on the first day of the week, drawing attention as Bitcoin briefly surged near $80,000 before quickly falling back to find buyers around the $76,600 level. This movement coincided with heightened geopolitical tensions and a global rise in risk aversion.
Altcoins follow Bitcoin’s downward trend
Following Bitcoin’s drop, major altcoins also experienced significant losses. Ethereum (ETH), XRP, and Solana (SOL) each lost approximately 3% of their value during the day. The CoinDesk 20 Index, representing a broad section of the digital asset market, closed Monday down about 2%.
Market analysts pointed to rising uncertainty surrounding negotiations between the United States and Iran, as well as increased tension in the Strait of Hormuz, as key factors behind the market’s volatility. Investors were observed reassessing their positions due to the risk that any disruption to oil shipments in the region could directly impact global markets.
Geopolitical risk spills over to traditional markets
According to the Wall Street Journal, Iran proposed that an end to attacks in the Strait of Hormuz be exchanged for lifting the maritime blockade and postponement of nuclear talks—conditions for a complete end to hostilities with the US. However, former US President Donald Trump’s last-minute cancellation of the negotiation delegation scheduled for Pakistan further deepened the uncertainty.
This heightened sense of global risk also spilled over into commodities. Brent crude prices surged over 3% to reach $107 per barrel, while US West Texas Intermediate (WTI) crude climbed 2.6% to $97.
Caution prevailed on American equity markets as well. The Nasdaq index slipped by 0.3%, pulling back from record highs, while the S&P 500 traded sideways ahead of earnings reports from major tech companies.
Crypto-related stocks face steep losses
Losses were not limited to cryptocurrencies; stocks associated with the sector also tumbled. Shares of top US crypto exchange Coinbase fell 1.5%. Stablecoin issuer Circle dropped 3.5%, and digital asset investment firm Galaxy Digital declined nearly 6%.
Market analysts noted that while institutional demand for Bitcoin remains robust, short-term holders have been taking profits. Retail investors who held Bitcoin on exchanges and were in profit reportedly shifted to sell, putting price pressure on the market despite ongoing ETF inflows and strong interest from large investors.
Analysts at Bitfinex emphasized that in the near term, the most likely scenario for Bitcoin is a period of consolidation or a pullback toward the $75,000 range. They underscored that for a sustainable upward trend to begin, the price must consistently stay above $80,000.
