Bitcoin Falls Below $100,000 as Iran Prepares to Close Strait of Hormuz

Bitcoin price drops to 100,100 USD after the Iranian parliament approves a proposal to close the Hormuz Strait. This move comes after the US bombed Iran's nuclear facilities yesterday.

With the final approval pending at the Supreme National Security Council, the market is preparing for an increased risk of energy disruption. As Hormuz is crucial for global oil supply, a macro shock of this magnitude could significantly disrupt the cryptocurrency market.

Impact of Potential Hormuz Closure

Besides Bitcoin, Ethereum dropped 3.5% below 2,200 USD, and XRP fell below 2 USD for the first time since April. Cryptocurrency liquidation reached 876 million USD in the past 24 hours, reflecting deep risk sentiment.

But why? The Hormuz Strait transports nearly 25% of global oil. Closing this bottleneck would immediately tighten global energy supply.

Oil prices could surge, stimulating inflation and delaying central bank interest rate cuts.

Consequently, higher energy costs will spread across economies. Consumers face higher fuel bills, while businesses must cope with increased transportation and production costs.

In response, investors typically rush to safe assets like US bonds and the dollar, withdrawing capital from risky assets like cryptocurrencies.

Moreover, energy-induced inflation will challenge the Federal Reserve's 2% target. If the Fed signals further tightening, real yields could increase.

History shows that higher real yields pressure Bitcoin by increasing the opportunity cost of holding non-yielding assets.

Crypto Market Risks and Macro Connections

The recent crypto selloff reflects broader market tensions. Liquidation focuses on long-term positions in Bitcoin and Ethereum. The VIX index rising and Treasury yield spreads expanding signal tightening risk budgets.

Additionally, speculative funds and small investors often use leverage in cryptocurrencies. Significant price volatilities trigger margin calls, intensifying the decline.

With current leverage indicators at high levels, further decline remains possible if uncertainty continues.

Simultaneously, the dollar's strength typically correlates with cryptocurrency weakness. A surge in the US Dollar Index could deepen Bitcoin's losses, potentially pushing it below 100,000 USD.

Prospects and Key Indicators

Traders should closely monitor three developments:

• SNSC Decision: Final vote on closing the Hormuz Strait.
• Oil Prices: Exceeding 100 USD/barrel could exacerbate inflation.
• Fed Signals: Comments on interest rate policy to address the energy shock.

In summary, the potential Iranian closure of the Hormuz Strait increases macro risks for cryptocurrencies.

If approved, expect prolonged pressure on Bitcoin and the broader digital asset market until geopolitical clarity and energy stability return.