Bitcoin Drops to $98K as Iran’s Strait of Hormuz Closure Threat Rattles Market

Bitcoin experienced a sharp decline on Sunday, June 22, 2025, falling from a recent high of nearly $103,000 to around $99,700, triggered by escalating geopolitical tensions in the Middle East. The price drop followed Iran’s Parliament approving the potential closure of the Strait of Hormuz, a critical artery for global oil trade, in response to U.S. military strikes on Iranian nuclear targets.

This development sent shockwaves through financial markets, with Bitcoin and other cryptocurrencies bearing the brunt of investor uncertainty. The broader market also saw significant losses, with Ethereum down 9%, Solana and Dogecoin each dropping 7%, reflecting a widespread sell-off amid fears of economic disruption.

Geopolitical Tensions and Market Fallout

The sequence of events began Saturday evening when U.S. President Donald Trump announced a “very successful” bombing campaign against Iranian nuclear facilities, marking Washington’s direct involvement in the Iran-Israel conflict.

Bitcoin prices initially fell from a daily high of $103,800 to $100,945 as the news broke, later recovering slightly to $102,000 by early Sunday. However, Iran’s parliamentary decision to authorize the closure of the Strait of Hormuz, reported by Reuters, intensified market fears, pushing Bitcoin to a low of $98,904 and a current price of $99,397, down 4% for the day. The threat of closing the strait, which handles 20% of global daily oil consumption, has raised concerns about potential oil price surges and their economic consequences.

The Strait of Hormuz, a narrow passage responsible for nearly one-third of seaborne oil trade, is vital for major economies like China, India, Japan, and South Korea. Analysts warn that a closure could push oil prices above $100 per barrel, with some projecting spikes to $120 or even $150 if disruptions persist. Such a scenario would increase costs for household fuel, industrial production, and transportation, given oil’s role in 95% of global goods production and delivery. Economists estimate that prolonged closure could reduce global GDP by 1-2%, creating a ripple effect across financial markets, including cryptocurrencies.

Iran’s threat to close the strait, though not yet implemented, awaits approval from its Supreme National Security Council and Supreme Leader Ayatollah Ali Khamenei. The move is seen as a direct retaliation to U.S. military actions, escalating tensions in an already volatile region. Central banks now face a dilemma, balancing the need to curb inflation driven by rising oil prices against the risk of stifling economic growth with higher interest rates. This uncertainty has fueled a risk-off sentiment among investors, contributing to the sharp declines in Bitcoin and other digital assets.

The crypto market’s reaction reflects its sensitivity to macroeconomic shocks, particularly those affecting energy prices and global trade. Bitcoin, often viewed as a hedge against inflation, has struggled to maintain its value amid fears of broader economic fallout. Ethereum, Solana, and Dogecoin’s steeper declines suggest that altcoins are even more vulnerable to such geopolitical-driven sell-offs. As the situation in the Middle East unfolds, market participants are closely monitoring developments in Iran and the potential for further disruptions in global oil supply chains.