The price of bitcoin dropped 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 level since January 31. This downturn occurred after Iran's Fars news agency reported that two missiles had hit a US patrol boat near Jask Island, allegedly after the vessel ignored Iranian warnings to leave its territorial waters.

As a result, Brent crude prices jumped over 5% to trade above $113 per barrel before paring some of its gains. The US subsequently denied the report, stating that no American ship had been struck. Although oil and equity futures pared their initial moves 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 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 only 0.2% for the day after starting Monday at $85.14.

XRP slipped to $1.40, while BNB dropped to $623. Dogecoin held its gains relatively better than most, rising 2.3% for the day 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 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 surpassed $80,000 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 heading into the week.

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