The price of bitcoin plummeted to $79,074 during late Asian trading hours on Monday, erasing nearly $1,500 from its intraday high of $80,594, which marked the cryptocurrency's highest value since January 31. This 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 supposedly disregarded Iranian warnings to leave its territorial waters. As a result, Brent crude oil prices surged by over 5% to trade above $113 per barrel before paring some of its gains. However, the US promptly denied the report, stating that no American ship had been hit.

While oil and equity futures pared their initial movements following the denial, bitcoin maintained its decline 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 from their intraday highs but remained positive for the day. Ether traded at $2,341, marking a 1.2% increase over the past 24 hours after reaching $2,368 earlier. Solana was valued at $84.08, representing a modest 0.2% gain for the day after starting Monday at $85.14.

XRP slipped to $1.40, while BNB fell to $623. Dogecoin, however, held its gains relatively better than most, with a 2.3% increase for the day to $0.1102, and its weekly print still standing 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 as the move unfolded. The Senate's Clarity Act compromise on stablecoin yield, released on Friday, had also contributed to the risk-on tone heading into the week.

The US denial of the incident and any potential fresh confirmations from either side are likely to set the tone for the remainder of the US session.