Truce End D-2, Middle East's Hormuz Closed... Bitcoin Faces a Fateful Week

▲ Poster of US-Iran talks in Islamabad, Pakistan

As the powder keg of the Middle East ignites again, the virtual asset market is gripped by pre-storm tension. With only two days left until the end of the US-Iran truce, Iran's sudden re-closure of the Strait of Hormuz is exerting immense downward pressure on risk assets across the board, including the leading cryptocurrency, Bitcoin (BTC).

According to major foreign media on the 19th (local time), Iran announced its intention to regain control of the Strait of Hormuz, citing the US's naval blockade against Iran as justification, just one day after declaring the strait's reopening. Following the re-closure announcement, military clashes, including an attack on a civilian oil tanker by a fast boat linked to Iran's Islamic Revolutionary Guard Corps (IRGC), were successively reported. This prompted US President Donald Trump, who had been optimistic about a peace settlement, to urgently convene a White House Situation Room meeting, escalating military tensions to their peak.

While the surface appears to be a hair-trigger situation, preparations for a second peace talk on the 20th, mediated by Pakistan, are breathlessly underway behind the scenes. The Pakistani government has completed security measures for the Islamabad talks, and the possibility of signing a Memorandum of Understanding (MOU) between the two countries is being discussed. However, it remains uncertain whether a dramatic compromise can be found, as the Iranian parliament and foreign ministry maintain a firm stance on key issues, stating, "We will not send any enriched uranium to the United States."

This escalation of geopolitical risk stemming from the Middle East has emerged as a critical variable that will determine the direction of the virtual asset market this weekend. Bitcoin, which recently surged to the $77,000 mark, signaling a bull market, saw investor sentiment rapidly freeze and fell to the $75,000 range immediately after the re-closure of the strait. Cryptocurrency experts warn that if negotiations between the two countries ultimately fail and military clashes, such as US airstrikes, intensify, the combination of global inflation concerns and extreme risk-off sentiment could lead to a 'panic sell' scenario where Bitcoin's price threatens even the early $70,000 support level.

Conversely, if significant progress is made towards a detailed agreement in the talks on the 20th, the situation will reverse 180 degrees. The suppressed macroeconomic uncertainties would dissipate instantly, leading to a massive inflow of institutional funds that had been on the sidelines, likely resuming an explosive relief rally towards the $80,000 mark. As the eyes of virtual asset investors worldwide focus on the negotiation venue in Islamabad, Pakistan, thorough risk management is required in anticipation of an extremely volatile market for the time being.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses incurred based on it. The content should be interpreted for informational purposes only.*