Cryptocurrency markets have wiped out approximately $80 billion in value over 24 hours, with losses deepening after the US military carried out a new wave of strikes on Iran, the second attack in three days, as fragile peace negotiations continue to wobble.
US forces targeted an Iranian military site late Wednesday and shot down four Iranian attack drones described by a US official as posing a threat around the Strait of Hormuz. Iran’s Islamic Revolutionary Guard Corps said it retaliated by striking a US airbase in Kuwait. President Donald Trump, speaking at a White House cabinet meeting on Wednesday, said he was “not satisfied” with the state of ongoing deal negotiations and left the door open to further military action.
Markets react sharply
Bitcoin fell 3.5% on the day to $72,646 – its lowest level since April 13, as the news erased gains made earlier in the week when Trump had hinted a peace deal was close to being finalised. The total crypto market capitalisation dropped to its lowest point since mid-April.
Ether fell harder, shedding more than 4% to drop below the psychologically important $2,000 level to $1,976, its weakest price since late March. Oil markets also reacted immediately, with WTI crude jumping 3.5% to top $92 per barrel and Brent climbing to $98.
Crypto behaving like a risk asset, not a hedge
LVRG Research director Nick Ruck said markets were pricing in heightened geopolitical risk, potential oil supply disruptions, and a flight to safety. “Bitcoin and Ethereum, despite their long-term narrative as hedges, continue to behave more like high-beta risk assets during periods of uncertainty,” he said.
Ruck added that traders are now closely watching escalation risks in the Middle East and any knock-on effects on inflation and Federal Reserve policy, noting that “crypto liquidity quickly thins and leveraged positions get flushed out” in such environments.
The selloff highlights a recurring tension in the crypto market: while Bitcoin is frequently positioned as a long-term store of value and geopolitical hedge, short-term institutional behaviour continues to treat it as a risk-on asset, one of the first to be sold when uncertainty spikes.
The bigger picture
The strikes have complicated what appeared to be a path toward a US-Iran ceasefire deal. Earlier this week, markets rallied on reports that Trump was prepared to announce a negotiated agreement. That optimism has now reversed, and with Trump signalling continued dissatisfaction with progress, the geopolitical overhang on risk assets, including crypto, remains firmly in place.
