A sharp decline in bitcoin's value occurred on Monday, with the cryptocurrency dropping to $79,074 after reaching an intraday high of $80,594, the highest level 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. This incident allegedly occurred after the vessel ignored Iranian warnings to leave the country's territorial waters, resulting in a spike in Brent crude prices of over 5% to above $113 per barrel. However, the US promptly denied the report, stating that no American ship had been hit.
Although oil and equity futures pared their initial gains following the denial, bitcoin maintained its decline as traders factored in the fragility of the ceasefire, which has been in place since early April. Other major cryptocurrencies followed bitcoin's downward trend but remained positive for the day. Ether traded at $2,341, a 1.2% increase over 24 hours, after reaching $2,368 earlier. Solana was at $84.08, up 0.2% for the day, while XRP slipped to $1.40 and BNB to $623.
Dogecoin held its gains relatively well, rising 2.3% for the day to $0.1102, with a weekly gain of 12.1%. The escalation occurred hours after President Donald Trump announced the US would begin escorting stranded ships in the Persian Gulf through the Strait of Hormuz, starting on Monday, as part of an operation dubbed Project Freedom. In response, Iran announced it had redefined its control zone in Hormuz, extending its maritime borders and signaling its intention to regulate shipping traffic in the area.
Bitcoin had broken the $80,000 mark for the first time since January, with $301 million in shorts liquidated as the move unfolded earlier on Monday. 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 and potential confirmations from either side will likely influence the rest of the US session.