Key Takeaways:
- Bitcoin (BTC) dipped below $100,000 on Sunday, a level not seen since May, fueled by escalating concerns about Iran potentially blocking the Strait of Hormuz.
- The Strait of Hormuz is a vital chokepoint, responsible for approximately 20% of global oil supply, making it a critical factor in global energy markets.
- Major altcoins, including XRP and Ether (ETH), experienced significant declines, mirroring Bitcoin’s downward trend.
Bitcoin (BTC), currently valued at $102,033.07, fell below the $100,000 mark on Sunday, reaching its lowest point since May. This decline suggests a growing risk aversion sentiment on Wall Street, triggered by reports indicating Iran’s potential blockade of the Strait of Hormuz.
The Strait of Hormuz, strategically situated between Oman and Iran, serves as the gateway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. Its importance lies in facilitating roughly 20% of the world’s oil trade.
Reports suggesting Iranian politicians are considering closing the Strait have raised concerns about a potential surge in oil prices early Monday.
“After US strikes on Iran last night, 50+ large oil tankers were scrambling to leave the Strait of Hormuz. Markets have been closed, but an immediate drop in supply is expected to send prices higher. JP Morgan described this as their worst-case scenario in the Israel-Iran war,” – The Kobeissi Letter on X.
JPMorgan analysts predict that a closure of the Strait of Hormuz could potentially drive oil prices to $120-$130 per barrel. This spike could push the U.S. inflation rate to as high as 5%, levels not seen since March 2023, a period when the Federal Reserve was actively raising interest rates.
The decline in BTC’s value had a ripple effect on the broader cryptocurrency market, pulling down major altcoins such as XRP, Solana (SOL), and ETH. XRP, a payment-focused cryptocurrency, fell by 6% to $1.935, marking its lowest value since April 10. Similarly, Ether (ETH), the native token of the Ethereum network, also slipped to levels observed in early May, according to CoinDesk data.
