Bitcoin price slip wipes weekend gains as oil surge hits 5% on Hormuz disappointment

Bitcoin's price dipped below $64,500 on Monday as investors digested heightened US-Iran tensions and the potential collapse of the Strait of Hormuz oil route. This marked a significant loss from the previous week's gains, as the cryptocurrency market absorbed the uncertainty surrounding the Middle Eastern conflict. The decline mirrored a similar downturn in US stocks, which initially suffered as the likelihood of Iran reopening the strategic waterway waned.

Deputy speaker Ali Nikzad of Iran's Islamic Consultative Assembly emphasized that the Strait of Hormuz's reopening "has no military solution," according to Al Jazeera and other outlets. Despite the setback, US WTI crude oil prices rose by nearly 5% to $80.90 per barrel, while the S&P 500 index managed to recover and turn green, although it still trailed Friday's record highs.

The weakening Japanese yen continued to dominate market attention, falling against the US dollar despite a rare joint intervention by Japan and the United States. The currency pair USD/JPY reached 159 on Monday, nearing the psychologically significant level of 160 before the close of the week's initial Asia session. Economist Mohamed El-Erian cautioned that sustained government intervention would be essential to stabilize the yen, warning that delays could render the intervention ineffective.

Bitcoin analysts cautioned that the market's tentative rebound was "far from assured," despite some promising signals. Glassnode's Market Pulse update highlighted weak spot-market momentum and an acceleration in centralized exchange buying, signaling an improving demand trend within a consolidation phase rather than a broader speculative expansion.

However, the platform noted that institutional inflows, amounting to $865.3 million in US spot Bitcoin ETFs, were "exceptionally strong" and a key positive catalyst for the market.

Hedge funds also demonstrated a shift to net long positions in CME Bitcoin futures, an event CEO Ki Young Ju of Bitcoin.com described as "rare." This change in strategy was attributed to the structural short position hedge funds were compelled to take in the basis trade, hoping for an upside. As market dynamics continued to evolve, analysts emphasized the need for decisive government action in Japan and a stabilization of the Japanese yen to support a more robust recovery in the cryptocurrency markets.