On Monday, bitcoin's price plummeted to $79,074 during late Asian trading hours, erasing nearly $1,500 from its intraday high of $80,594, which marked the cryptocurrency's highest value since January 31. The 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 allegedly disregarded Iranian warnings to leave its territorial waters.

As a result, Brent crude prices soared over 5% to trade above $113 per barrel before paring back some of the gains. However, the US promptly denied the report, stating that no American ship had been attacked. Although oil and equity futures reversed 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 also 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 a mere 0.2% for the day after starting Monday at $85.14.

XRP fell to $1.40, while BNB dropped to $623. Dogecoin, however, held its gains relatively well, 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 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 will likely determine the trajectory of the US session.