Global financial and crypto markets were dealt a major blow after Iran officially rejected a proposed temporary ceasefire with the United States on Tuesday. The decision came as President Trump’s deadline to attack Iran’s energy infrastructure drew near. The negative sentiment caused Bitcoin prices to plunge below $68,300 in a short period of time.
In energy markets, crude oil prices surged above $114 a barrel following reports of a recent explosion on Kharg Island, which handles 90% of Iran’s oil exports. The explosion marked a serious escalation in the military conflict, evoking memories of attacks in the 1980s. The ongoing closure of the Strait of Hormuz continues to restrict global oil supplies, adding to inflationary pressures.
Iran has set strict preconditions for any peace talks, including demands for compensation for damages and guarantees that the US and Israel will cease attacks. Tehran has also insisted it wants to retain control of the Strait of Hormuz and its transit fee system. The failure to reach an agreement in the indirect negotiations through intermediaries has further exacerbated the diplomatic impasse.
The cryptocurrency market as a whole has seen a massive sell-off with major assets such as Ethereum, Solana, and XRP also seeing sharp declines. Derivatives data showed Bitcoin’s open interest fell by 3.69% in the past 24 hours, reflecting investor concerns about geopolitical risks. The shrinking trading volume suggests investors are now more likely to take a wait-and-see approach.
The Islamic Revolutionary Guard Corps (IRGC)’s retaliatory threat to cut off oil supplies to the US and its allies for years has added to market uncertainty. If Trump carries out his threat to attack power plants and bridges after tonight’s deadline, analysts expect market volatility to reach extreme levels. The situation now depends entirely on developments in the last few hours before 8pm ET.
