For the first time since January 31, BTC rose above $80,000, reaching an intraday high of $80,594, but then sharply fell back below $79,000. The trigger was a report by Iran's Fars news agency stating that two missiles had struck a U.S. patrol boat near Jask Island in the Strait of Hormuz after the vessel allegedly ignored Tehran's warnings to leave Iranian territorial waters. Following this news, Brent crude oil briefly gained over 5%, rising above $113 per barrel. Washington denied the attack report, after which oil and stock futures partially recovered; however, Bitcoin held onto its decline.
The correction occurred against the backdrop of geopolitical escalation around the Strait of Hormuz. Earlier on Sunday, Trump announced the launch of "Project Freedom": U.S. military ships, aircraft, and drones would begin escorting neutral-country vessels through the strait starting Monday. In response, Iran announced it was expanding its control zone to Fujairah, effectively claiming jurisdiction over shipping in the region regardless of U.S. actions. According to Axios, Trump initially received a plan for a forceful passage through the strait but opted for a more cautious approach at the last minute.
Before the escalation began, the market had been in risk-on mode: a Senate compromise on the CLARITY Act bill regarding stablecoin yields had added optimism. On the way up to $80,000, short positions worth $301 million were liquidated.