Bitcoin collapses by $75,000 amid US-Iran shootout, is this the start of a market crash?

Investor sentiment frozen by the sound of gunfire in Hormuz…Bitcoin collapses below $75,000

▲ Ships anchored and stopped in the Strait of Hormuz ©

A day before the end of the ceasefire between the US and Iran, the virtual asset market was gripped by deep fear as a physical clash between the two sides materialized in the Strait of Hormuz. With geopolitical risks at a critical juncture for escalation, major virtual assets, including Bitcoin (BTC), are showing weakness across the board.

According to CoinMarketCap, a global virtual asset market relay site, as of 6:38 AM on the 20th, the leading cryptocurrency, Bitcoin, was trading at $74,809.79, down 1.19% from 24 hours ago. It appears that downward pressure is intensifying as it has even given up the psychological support level of $75,000.

Ethereum (ETH), the leading altcoin, also plunged 2.64% to $2,288.70, breaking the $2,300 mark. XRP, a top-tier cryptocurrency by market cap, fell 1.15% to $1.41, and Solana (SOL) dropped 1.16% to $85.18, reflecting the overall market slump. Dogecoin (DOGE), a leading meme coin, is trading at $0.09423, down 0.94%. The total virtual asset market capitalization decreased by 1.35% to $2.52 trillion, and the Fear & Greed Index, which indicates market sentiment, fell to 52, reflecting investors' strong wait-and-see attitude.

The direct cause of the 'cold snap' hitting the coin market is the volatile military tension between the US and Iran surrounding the Strait of Hormuz. US President Donald Trump's strong move to fire upon and seize an Iranian cargo ship escalated the pressure to its peak, serving as the fuse. While both sides accused each other of 'violating the ceasefire agreement,' President Trump even hinted at the possibility of blatant escalation, stating that if an agreement fails, he would destroy all of Iran's power plants and bridges.

The final peace talks, which were expected to be held in Islamabad, Pakistan, on the 20th, are also in limbo as Iran's attendance remains uncertain. With the gap between the two sides not narrowing regarding Iran's nuclear abandonment and the US lifting its naval blockade, concerns that the worst-case scenario of a full-scale war resuming rather than a ceasefire extension could materialize have frozen investor sentiment in the risky asset market.

Experts analyze that Bitcoin's future direction will depend entirely on the success and outcome of the last-minute US-Iran talks scheduled for the 20th. If a dramatic compromise is reached or at least an agreement to extend the ceasefire is made, the market could experience a relief rally and quickly recover to $75,000. However, if negotiations fail and Iran launches a counter-operation, such as blockading the Bab-el-Mandeb Strait in the Red Sea, leading to a full-scale escalation, coupled with concerns about rising global inflation, the possibility of Bitcoin falling further to the early $70,000s in the short term cannot be ruled out. Amid the tension before the storm, the virtual asset market is expected to continue its extreme roller-coaster ride for some time.

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