The world's largest cryptocurrency by market capitalization, Bitcoin, which had recently shown signs of a moderate rebound, has once again entered a downward trajectory due to the escalating conflict between the US/Israel and Iran. During Monday's Asian trading session, Bitcoin traded near its lowest level in two weeks. As geopolitical tensions in the Middle East intensified, a wave of "extreme fear" swept through global financial markets. Asian stock markets collectively suffered heavy losses, with the day being described as a "Black Monday." Japanese and South Korean stock markets led the decline, copper prices fell to their lowest point in over three months, spot gold dropped nearly 9% intraday, erasing all its gains for the year, and spot silver fell almost 8%. Bitcoin initially fell nearly 2% in early Asian trading before rebounding to a crucial support level.
On Monday, as the US-Iran conflict entered its fourth week and a final ultimatum from the Trump administration entered its countdown phase, rhetoric from both sides suddenly hardened. Bitcoin, often seen as a barometer for risk assets, declined in tandem with global stocks, bonds, and gold. The dual shock of rising inflation expectations fueled by soaring oil prices and a worsening economic growth outlook is forcing investors to reassess the monetary policy paths of the Federal Reserve and other major global central banks, with market sentiment increasingly turning defensive.
The cryptocurrency fell as low as $67,371 during Asian trading, its weakest level since March 9, and spent most of the day hovering around $68,000—a critical technical support level based on its 200-week moving average. This weakness in the risk-asset bellwether reflects a broader pullback in global risk assets, primarily driven by the sharp escalation of Middle East tensions over the weekend.
US President Donald Trump threatened to bomb Iran's power plants and other core electricity infrastructure unless Iran reopened the key global trade waterway, the Strait of Hormuz, emphasizing that the largest facility would be the first target. Tehran responded with a warning that it would strike critical infrastructure across the entire Middle East if its fuel and energy infrastructure were attacked by the US and Israel.
Recent developments indicate the situation remains volatile and escalating. Iran's Defense Committee issued a statement declaring that if its coasts or islands are attacked, it will immediately deploy various types of naval mines across all shipping lanes in the Persian Gulf. A spokesperson for Iran's Central Khatam al-Anbiya Headquarters stated that due to precise strikes and strategic deployments by Iranian armed forces, the multi-layered US-Israeli defense network in the region has collapsed, weapon supply systems have been disrupted, and the overall situation is shifting. Iranian forces have effectively imposed a "quasi-blockade" on the Strait of Hormuz, obstructing approximately 20% of global energy flows, accompanied by attacks on tankers and shipping disruptions. A recent International Energy Agency (IEA) study indicated that military actions by the US and Israel against Iran in late February triggered the largest supply disruption in the history of the global oil market.
Concurrently, the US government is reportedly considering military options, including potential ground or quasi-ground control, to restore shipping channels and secure full control over the Strait of Hormuz. Reports on Friday suggested the White House is deploying hundreds of Marines to the Middle East while weighing a plan to send ground forces to seize Iran's Kharg Island oil export hub. Brent crude oil has stabilized near $110 per barrel, suggesting high oil prices may pose a persistent major threat that investors, central bankers, and corporate leaders must confront. Kharg Island is Iran's largest crude oil export terminal, accounting for 90% of its exports.
Rachael Lucas, a senior analyst at BTC Markets, noted, "The primary trigger is geopolitical. President Trump's 48-hour ultimatum, threatening to destroy Iran's power plants unless the Strait of Hormuz is reopened, has significantly boosted Brent crude prices and hammered global risk assets."
So far this month, the impact of the Iran conflict on Bitcoin has been considerably less pronounced than on more traditional assets. On Monday, after an initial surge, international oil prices pared gains but still ended slightly higher, while gold fell over 3%, with spot gold prices nearly wiping out their year-to-date gains. The traditional safe-haven metal is down 17% this month, marking its longest losing streak since October 2023. WTI crude oil rose 3.0% intraday, stabilizing above the historically high level of $100 per barrel, last trading at $101.21. Asian stocks opened lower, while government bond yields in many countries rose significantly. Japanese and South Korean indices fell sharply, and the MSCI All-Country World Index, a broad measure of global equities, extended its yearly decline. Asian stocks fell for a third consecutive day, approaching a technical correction, with the MSCI Asia-Pacific benchmark index down 3.5%. South Korea's benchmark index plunged 6.5%, and Japan's Nikkei 225 index closed 3.5% lower.
Meanwhile, Bitcoin has gained approximately 4% in March. For a major risk asset that remains 45% below its peak of $126,251 reached in October, this represents a relatively calm period. The cryptocurrency market faced a significant sell-off in the fourth quarter, which has kept prices under pressure. At the key $68,000 level, Bitcoin is hovering near its 200-week exponential moving average—a psychologically significant trendline for the asset.
Pratik Kala, Head of Research at Apollo Crypto, commented, "Historically, if you are bullish, these zones have been excellent areas to accumulate Bitcoin."
Nevertheless, cryptocurrency trading remains subdued. A market sentiment index compiled by Coinglass remains in "Extreme Fear" territory, having been in this negative state for 25 of the past 30 days. Net inflows into US-listed spot Bitcoin exchange-traded funds (ETFs) turned negative mid-last week, with significant outflows of $305.8 million over three days, although these ETFs still recorded net inflows of approximately $95 million for the entire week.
Haider Rafique, Global Managing Partner at cryptocurrency exchange OKX, stated, "Weeks of sharp volatility like this tend to test the new narrative of Bitcoin as an 'emerging safe haven,' especially as its price trend has recently moved more in correlation with risk assets rather than inversely."
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