Truce Collapse Crisis…Geopolitical Risk Hits Bitcoin

▲ Iran War, Soaring Oil Prices, Bitcoin/ChatGPT Generated Image ©

Bitcoin (BTC) faced downward pressure as risk-aversion sentiment spread due to the escalating armed conflict between the US and Iran. Analysts suggest that the simultaneous rise in international oil prices and the dollar's value has dampened investment sentiment across risky assets, including cryptocurrencies.

According to investment media FXStreet on July 8 (local time), Bitcoin fell to $62,657 during Asian trading hours, dropping about 1% since midnight UTC. Ethereum (ETH), as well as XRP (Ripple), and Solana (SOL) also fell by 1-2.3%. During the same period, West Texas Intermediate (WTI) crude oil futures rose more than 2% to $72.27, and the US Dollar Index maintained its strength above 101.

The media reported that the US carried out intense airstrikes against Iran after three vessels, including Qatari and Saudi Arabian oil tankers, were attacked in the Strait of Hormuz. In response, Iran stated that it struck 85 US military facilities in retaliation for airstrikes on Hormozgan and Mahshahr provinces. This clash led to assessments that the truce between the two countries was virtually on the brink of collapse.

This incident is also rekindling inflation concerns. The media explained that when the Iran war broke out in late February, international oil prices significantly exceeded $100 per barrel, causing a global inflation shock. Although oil prices have since fallen below $60, consumer inflation expectations remain high. Consequently, concerns about potential interest rate hikes in major countries, including the US, continue.

The media analyzed that as interest rates rise, it becomes more difficult for investors to forgo relatively safe bond yields and move funds into risky assets like cryptocurrencies. It explained that if geopolitical tensions and interest rate burdens increase simultaneously, the volatility of the cryptocurrency market, including Bitcoin, could also expand.

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