The cryptocurrency market experienced a significant downturn on Monday, with bitcoin plummeting to $79,074 in late Asian trading hours, marking a nearly $1,500 decline from its intraday high of $80,594, the highest level seen since January 31. This reversal was prompted by a report from Iran's Fars news agency, which claimed that two missiles had hit a US patrol boat near Jask Island, allegedly after the vessel disregarded Iranian warnings to leave its territorial waters. As a result, Brent crude prices soared over 5% to trade above $113 per barrel before partially retracing its gains.
However, the US promptly denied the report, stating that no American ship had been struck, which led to oil and equity futures paring their initial moves. Despite this, 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 but remained positive for the day, with Ether trading at $2,341, up 1.2% over the past 24 hours, and Solana sitting at $84.08, up 0.2% on the day. Meanwhile, XRP slipped to $1.40, and BNB fell to $623, while Dogecoin held its gains relatively better, rising 2.3% on the day to $0.1102, with its weekly print still at 12.1%.
The escalation occurred just hours after President Donald Trump announced the US would begin escorting stranded ships in the Persian Gulf through the Strait of Hormuz, starting Monday, as part of an operation dubbed Project Freedom. In response, Iran declared it had redefined its control zone in Hormuz, extending its claimed maritime borders and indicating it would regulate shipping traffic in the area, regardless of US operations. Earlier on Monday, bitcoin had broken the $80,000 barrier for the first time since January, with $301 million in shorts liquidated as the move unfolded.
The Senate's Clarity Act compromise on stablecoin yield, released on Friday, had contributed to the risk-on tone heading into the week. The outcome of the US denial and any potential fresh confirmations from either side will likely set the tone for the remainder of the US session.