Iran’s parliament approved a proposal to close the Strait of Hormuz, a vital global oil transit chokepoint, triggering significant market volatility and investor flight from risk assets. The geopolitical escalation caused Bitcoin to nosedive below the $100,000 psychological threshold, wiping out nearly $950 million in cryptocurrency positions through forced liquidations.
The potential shutdown threatens to propel global oil prices upward, intensifying inflationary pressures worldwide. This development complicates the Federal Reserve’s monetary policy trajectory amid ongoing efforts to balance economic stability and inflation containment. Concurrently, surging U.S. Treasury yields and a strengthened dollar have elevated the opportunity cost of holding non-yielding assets like Bitcoin, amplifying downward pressure across cryptocurrency markets.
Market analysts are closely monitoring three critical indicators: the Iranian Supreme National Security Council’s final decision regarding the Strait’s closure, Brent crude oil price fluctuations, and Federal Reserve communications regarding interest rate policy. These factors will likely dictate near-term market direction as investors navigate heightened geopolitical and economic uncertainty.