The Fall of Cryptocurrencies Amid Geopolitical Turbulence: When Oil and Politics Redefine Risk

Cryptocurrencies’ decline intensified on Monday as global markets reacted to the U.S.-Iran conflict and the closure of the Strait of Hormuz. Although Bitcoin showed some recovery over the weekend, reaching $68,000 after changes in Iranian leadership, Monday’s reality pushed pressure back on the entire crypto ecosystem.

Bitcoin retreats while Brent crude oil soars 6%

During the observed period, Bitcoin contracted about 1.1% in the last 24 hours, slipping to $66,702 as traditional markets reopened and began processing the implications of the conflict. However, the latest figures show a partial rebound: BTC is currently trading at $70.55K with a 3.39% gain in 24 hours, though it remains down 6.20% for the week.

The most dramatic movement occurred in energy markets. Brent crude oil surged up to 13% at opening before stabilizing around $77.50, marking a 6.4% increase — the largest jump since Russia’s invasion of Ukraine in 2022. This rally reflects concerns over the effective closure of the Strait of Hormuz, through which about a fifth of the world’s oil passes.

The effects spread across the entire crypto sphere. Ether dropped 2.5% to $1,967 at the most critical point, while Solana lost 4.1% to $84 and XRP fell 3.6% to $1.36. Updated data shows some stabilization: Ethereum now trades at $2.14K (+3.91% 24h), Solana at $90.24 (+4.09% 24h, with a weekly decline of 5.19%), and XRP at $1.41 (+1.87% 24h). Solana led weekly losses with an 8.1% drop over seven days during the period of maximum tension.

Massive liquidations expose derivatives fragility

Cryptocurrency declines worsened as over $400 million in positions were liquidated in just four hours on Monday. Bitcoin, Ether, and tokenized oil contracts led the outflows, highlighting how markets heavily exposed to derivatives can turn modest net movements into catastrophic losses for leveraged traders.

Volatility was fueled by contradictory headlines. Donald Trump announced a five-day pause on attacks against Iranian electrical infrastructure, briefly causing Bitcoin to jump from $67,500 to over $71,200. However, Iran’s denial of any direct communication triggered a quick reversal of those gains, clearly illustrating how uncertainty dominates the price.

Global markets recalculating: when inflation returns

Stock markets also felt the impact. Asian equities fell 1.4%, while U.S. stock futures declined 0.7%. Gold, a safe-haven asset, rose to $5,350 per ounce, a classic indicator that investors are seeking to reduce risk exposure.

The real dilemma lies in inflation. Elevated energy prices are directly fueling inflation expectations, delaying the Federal Reserve’s rate cut timeline. This tightening of liquidity conditions especially pressures risk assets — a category in which the crypto market still falls when geopolitical volatility dominates sentiment.

Limited risks? Experts’ perspective

Despite the turbulent outlook, some crypto traders suggest the damage could be contained. Jeff Mei, COO of BTSE, argued that “since Iran has been isolated from global financial markets for quite some time, we believe the downside risk is limited.”

His analysis notes that although some express concern over oil prices and resulting inflation, “the world has detached from Iranian oil, and increased supply from OPEC and the U.S. should be enough to stabilize prices.” This perspective adds nuance to the pessimistic outlook, though its validity depends on factors outside market control.

Monday also brought conflicting reports on negotiations. The Wall Street Journal reported renewed momentum toward nuclear talks, while Iran’s National Security Chief Ali Larijani stated the country is not willing to negotiate. Meanwhile, The Atlantic reported that Trump would agree to talks with Iran’s new leadership.

Persistent uncertainty: the reality of crypto’s fall

Crypto declines will remain driven by external factors until two critical questions are answered: Will the Strait of Hormuz reopen? And how long will it take to reach Trump’s “targets”?

Until then, Bitcoin, Ethereum, Solana, XRP, and the overall crypto ecosystem operate as risk assets in a world that has just become more dangerous. The partial recovery seen in recent prices — BTC at $70.55K and Ethereum at $2.14K — suggests markets are calibrating risk rather than capitulating completely, but volatility will remain a constant companion in the coming days.