Key facts
- Bitcoin and ether dropped more than 2% after President Trump declared the ceasefire with Iran "over."
- U.S. airstrikes targeted Iranian boats in the Strait of Hormuz, prompting retaliation against Kuwait and Bahrain.
- The renewed geopolitical tensions led to a risk-off sentiment, impacting cryptocurrencies and U.S. equities.
- Altcoins, particularly Solana, experienced significant declines, wiping out recent gains.
- The Dollar Index (DXY) rose amid concerns over inflation and potential interest rate hikes.
Bitcoin and major cryptocurrencies experienced a downturn following renewed U.S.-Iran tensions, exacerbated by President Donald Trump's declaration that the existing ceasefire was "over." The U.S. Central Command carried out strikes on over 60 Iranian small boats in the Strait of Hormuz, which Iran retaliated against with attacks on Kuwait and Bahrain. This escalation spurred a risk-off sentiment among investors, leading to a decline in Bitcoin and ether by more than 2%.
Altcoins bore the brunt of the sell-off, with Solana completely reversing its July gains and tokens like JUP, ETHFI, and PUMP losing between 5.5% and 9.3%. Total cryptocurrency liquidations reached $450 million, with $350 million attributed to altcoin trading pairs. U.S. equity futures also tumbled, with the Nasdaq 100 and S&P 500 index futures falling as much as 1.5%.
The Dollar Index (DXY) saw an increase, reflecting concerns about rising inflation and potential interest rate hikes. Despite the price drop, Bitcoin's open interest in futures has decreased slightly, suggesting traders are not aggressively shorting the rally. However, ether's open interest has remained steady, leading to significant liquidations. The DeFi token MORPHO emerged as an exception, rising 4% as its total value locked on the protocol reached a record 4 million ETH.