Bitcoin’s price saw a swift decline on Thursday morning following U.S. President Donald Trump’s signals of potential intervention against Iran and developments in the Strait of Hormuz. Earlier this week, BTC/USD had climbed as high as $79,449, but after Trump ordered navy ships to “strike Iranian boats laying mines,” the leading cryptocurrency pulled back to $78,326 during early trading. Prior to this downturn, Bitcoin had experienced a significant rally, fueled by growing risk appetite in the crypto market. However, renewed geopolitical tensions prompted some investors to minimize their exposures across both crypto and stock markets.
Escalating tensions in the Strait of Hormuz shake markets
President Trump’s comments introduced further uncertainty to the already fragile ceasefire process. Through a social media post, he stated that there was no set date for ending the ceasefire or going to war with Iran, and further cast doubt on Iran’s leadership position, which stoked anxiety over possible negotiations. Meanwhile, after the U.S. Department of Defense announced the seizure of another Iranian oil tanker in the Indian Ocean, reports emerged that Iran had attacked three cargo ships in the Strait of Hormuz, capturing two of them. The chief Iranian negotiator’s announcement that initial revenues had arrived from ships passing through the strait further heightened regional tensions.
The Strait of Hormuz remains under close watch as it is the world’s most critical oil transit route. As tensions in the region mounted, oil prices spiked. By contrast, after benefiting in recent weeks from rising risk appetite, Bitcoin appeared to adopt a more cautious pricing approach amid these developments.
Following President Trump’s public order to target “any Iranian vessel laying mines,” market volatility surged, prompting investors to take a more defensive stance.
Volatility in Bitcoin: Weekly gains remain intact
Despite rallying by about 7.5% earlier in the week, Bitcoin relinquished part of its gains after Trump’s remarks. While the retreat from the $79,000 level was notable, the cryptocurrency still maintained a much stronger position compared to previous months. In contrast to the subdued trading seen in February and March, overall market sentiment remains relatively positive.
The Crypto Fear and Greed Index, which gauges market mood, recently improved from “Extreme Fear” to simply “Fear.” This shift suggests the market is less risk-averse than at the beginning of the year. Despite recent price swings, Bitcoin has managed to hold above key support levels, indicating a degree of ongoing market stability.
Demand from institutional investors continues to underpin confidence. Strategic management firms reportedly purchased around $2.5 billion worth of BTC this week alone, reinforcing their reserves. This robust demand has helped sustain interest in Bitcoin even amid geopolitical headwinds.
Futures market inflows drive recent momentum
Some analysts point out that the latest rally was predominantly fueled by demand in the derivatives markets. While trading volumes in spot markets remained weak, there was a marked uptick in perpetual futures contracts activity.
According to Cryptoquant CEO Julio Moreno, the recent rally was “driven entirely by demand from the futures market,” while spot market interest, though still subdued, is slowly recovering.
A similar pattern appeared in January, when Bitcoin surged toward $98,000 on the back of derivatives-driven momentum. Market watchers are now closely monitoring whether the current drop will prove temporary or trigger a broader correction.
Crypto analyst Michaël van de Poppe sees the pullback from $79,000 as a typical price movement. Based on his chart analysis, as long as Bitcoin holds within the $73,000-$75,000 range, there remains potential for the price to climb toward $85,000-$88,000 over the next two weeks.
