In a dramatic turn of events, bitcoin's price plummeted to $79,074 during late Asian trading hours on Monday, erasing nearly $1,500 from its intraday high of $80,594, which was the highest level seen since January 31. The sudden downturn was triggered by a report from Iran's Fars news agency, which alleged that two missiles had struck a US patrol boat near Jask Island after the vessel failed to heed Iranian warnings to leave the country's territorial waters. As a result, Brent crude oil prices surged over 5% to above $113 per barrel before paring some of the gains.

However, the US promptly denied the report, stating that no American ship had been attacked. Although oil and equity futures pared their initial moves following the denial, bitcoin's decline persisted as traders factored in the fragility of the ceasefire that has been in place since early April. Other major cryptocurrencies followed bitcoin's downward trend, albeit remaining positive for the day. Ether, for instance, was trading at $2,341, representing a 1.2% increase over the past 24 hours after reaching $2,368 earlier.

Solana was priced at $84.08, up a mere 0.2% on the day after starting Monday at $85.14. XRP and BNB experienced declines, while Dogecoin managed to hold its gains relatively better, rising 2.3% to $0.1102, with its weekly print still at 12.1%.

The escalation occurred just hours after President Donald Trump announced on Truth Social that the US would commence escorting stranded ships in the Persian Gulf through the Strait of Hormuz, starting Monday, as part of an operation dubbed Project Freedom. This operation involves the deployment of guided-missile destroyers, aircraft, and drones.

In response, Iran declared that it had 'redefined the control zone' in Hormuz, extending its claimed maritime borders to Fujairah and signaling its intention to regulate shipping traffic in the area, regardless of US operations. Earlier on Monday, bitcoin had broken through the $80,000 barrier for the first time since January, resulting in the liquidation of $301 million in shorts. The Senate's Clarity Act compromise on stablecoin yield, released on Friday, had contributed to the risk-on tone leading into the week.

The US denial's validity and potential fresh confirmations from either side are likely to dictate the market's trajectory for the remainder of the US session.