Bitcoin experienced a significant decline to $79,074 during late Asian trading hours on Monday, marking a nearly $1,500 reversal from its 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 claimed that two missiles had hit 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 jumped over 5% to trade above $113 per barrel before paring the gain. 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 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 dropped to $1.40, while BNB declined 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 ships stranded 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 been contributing to the risk-on tone leading into the week.

The validity of the US denial or the emergence of fresh confirmations from either side is likely to set the tone for the remainder of the US session.