Bitcoin drops below $77,000 as military strikes escalate
The U.S. Central Command said American forces began striking Islamic Revolutionary Guard Corps targets in Iran at 12 p.m. ET on Tuesday, citing recent attempted attacks against commercial vessels in the Strait of Hormuz and U.S. military personnel stationed in the region. Bitcoin fell through $78,000 as reports of the operation emerged before extending its decline below $77,000. The cryptocurrency traded around $76,762 at the time of writing, after falling from an intraday high near $79,166. Selling also reached Ethereum, which moved below $2,400 during the market decline.
According to CoinGlass data, roughly $115 million in leveraged long positions across the crypto market were liquidated within one hour. Liquidations occur when an exchange closes a leveraged position after the trader's collateral can no longer cover mounting losses. A rapid price decline can force the closure of long positions, adding more sell orders to an already weak market.
One day earlier, Bitcoin had held near $78,000 even as earlier exchanges between U.S. and Iranian forces pushed crude prices above $90. The latest round of strikes placed renewed pressure on that price area and erased the asset's brief attempt to hold above short-term support. The decline also followed a strong August for Bitcoin, which gained about 23% during the month before renewed geopolitical and interest-rate concerns weighed on the opening trading sessions of September.
Strait of Hormuz tensions disrupt global energy markets
According to CENTCOM, the operation followed alleged Iranian attempts to attack commercial shipping in the Strait of Hormuz and American service members deployed to the region. Iranian state media reported explosions across several locations on the country's southern coast, including Qeshm Island, Bandar Abbas and Chabahar. Reports also identified Jask, Konarak, Minab and Sirik among the areas struck.
Qeshm Island and Bandar Abbas sit close to the Strait of Hormuz, a key passage connecting Persian Gulf energy exporters with international markets. Before the current conflict, roughly one-fifth of global oil and liquefied natural gas supplies moved through the waterway. The Associated Press reported that Tuesday's action ended roughly a month without direct military exchanges between the two countries.
Iranian semi-official news agencies reported that Tehran had started launching missiles and drones in response. An IRGC spokesperson said the United States would regret its new attacks. President Donald Trump described the American operation as large and powerful and warned Tehran against further retaliation, saying another Iranian response would lead to a much harder and higher level of U.S. attack.
Oil above $90 adds inflation and rate pressure
Crude prices accelerated as military activity returned to areas around the Strait of Hormuz. Brent crude settled 4.6% higher at $94.65 per barrel, while U.S. West Texas Intermediate rose 5.2% to $90.22. Oil traders were also monitoring reports that two tankers had been hit while leaving the strait. Iranian officials have warned that Gulf oil exports could face additional disruption if military and economic pressure on Tehran continues.
Higher energy prices matter to crypto investors because a sustained rise in fuel costs can feed into inflation data and influence Federal Reserve policy. U.S. Treasury yields rose during Tuesday's trading, while the S&P 500 fell to its lowest level since Aug. 4. August inflation data and the Federal Reserve's September policy decision could therefore affect Bitcoin's next move.
In August, Bitcoin rebounded after CPI data showed annual U.S. inflation at 3.4%, but oil supply disruptions could place fresh pressure on subsequent readings. Federal Reserve Chair Kevin Warsh has maintained a firm position on inflation and left open the possibility of higher interest rates. Rising Treasury yields can increase the appeal of interest-bearing assets while raising financing costs, conditions that have previously weighed on Bitcoin and other assets that do not produce yield.
U.S. markets fall as leveraged crypto positions unwind
Pressure from the military escalation has not remained confined to digital assets. U.S. equities declined as investors assessed the effect of higher oil prices, while the selloff in government bonds pushed Treasury yields upward. Bitcoin's fall below $77,000 placed the asset close to the lower end of the price range it had established after its August rally.
The intraday low near $76,483 left the $76,500 area as an immediate level being tested by sellers. A sustained break below that region would remove another support area that previously slowed declines. Any recovery would first require Bitcoin to regain $77,000, followed by the former support zone between $78,000 and $79,000.
Liquidation data offer another measure of the pressure facing leveraged traders. The one-hour liquidation total of roughly $115 million was attributed mainly to long positions, indicating that traders positioned for higher prices absorbed most of the forced closures during the drop. Meanwhile, Iran's response remained active, with further missile launches reported after the initial U.S. strikes.
For investors watching the crypto market, the intersection of geopolitical risk, energy prices, and monetary policy creates a complex backdrop. Bitcoin had been trading in a relatively stable range following its August rally, but the latest military escalation has reintroduced volatility and uncertainty. The coming weeks will likely hinge on whether diplomatic channels can reduce tensions near the Strait of Hormuz and whether upcoming inflation data gives the Federal Reserve reason to change course on interest rates.
