The United States and Iran launched missile strikes against each other's military facilities overnight, marking the most significant direct confrontation between the two nations in decades and shattering an already fragile ceasefire.
Bitcoin surged past $80,000 before retreating to around $79,000, resulting in over $200 million in crypto liquidations within 24 hours, with more than $115 million from long positions.
US forces conducted defensive strikes targeting Iranian missile launch facilities and naval vessels near the Strait of Hormuz on May 25-26, responding to alleged ceasefire violations of the April 8 Pakistan-brokered truce. Iran condemned the strikes and threatened retaliation.
On Polymarket, the odds of a US-Iran peace deal currently sit at 37% following the escalation.
The liquidation cascade was concentrated but not catastrophic by crypto standards. The heavy tilt toward long liquidations suggests traders were blindsided by the geopolitical deterioration.
Iran has increasingly turned to digital assets to circumvent sanctions, giving lawmakers ammunition to push for tighter controls on exchanges and cross-border crypto flows.
Roughly a fifth of the world's oil supply passes through the Strait of Hormuz, raising concerns about disrupted energy flows that could feed inflation and interest rate expectations, ultimately impacting all risk assets.