Crisis in Hormuz. US-Iran Exchange of Fire Hits Crypto Market, Has Bitcoin Short-Term Top Signal Emerged?

TradingKey - US-Iran skirmish triggers crypto market decline; Bitcoin briefly dips below $80,000, with a potential short-term correction to $75,000.

On May 8 (GMT+8), affected by the reignited conflict in the Middle East, the crypto market reversed its gains, with major coins generally trending downward. Among them, Bitcoin ( BTC) fell over 1%, breaking below the key $80,000 level; Ethereum ( ETH) dropped nearly 2%, piercing $2,300; Ripple ( XRP) slid more than 2%, losing the $1.4 level; Dogecoin ( DOGE) tumbled 4%, retreating to near the $1 mark.

Price performance of the top 10 cryptocurrencies by market cap, source: CoinMarketCap

Yesterday, renewed clashes between the U.S. and Iran reignited tensions in a previously stabilizing situation. The U.S. Central Command issued a statement saying a U.S. Navy guided-missile destroyer formation was attacked while transiting the Strait of Hormuz, prompting immediate self-defense strikes against Iranian military facilities responsible for the assault. Iran stated that U.S. forces violated the ceasefire agreement by attacking Iranian vessels heading toward the Strait and coastal civilian areas, prompting a counter-response from the Iranian armed forces.

Previously, Bitcoin had surged past $82,000, leading a rare broad-based rally in the crypto market, with coins like TON and ZEC posting impressive gains and dominating the top gainer lists across major exchanges. However, the sudden US-Iran conflict led to massive liquidations for optimistic bulls. Over the past 24 hours, more than 110,000 traders were liquidated, with total liquidations reaching $344 million, of which long liquidations accounted for $252 million, or 34%.

Crypto market liquidation data, source: Coinglass

Currently, the crypto market has shifted from greed to fear, with the sentiment index dropping from 62 to below neutral levels at 47, indicating slight fear. However, the US-Iran skirmish may just be a minor episode in a broader easing of tensions, as both sides have shown restraint following the exchange, preventing further escalation. Notably, U.S. President Trump stated, "Despite the strikes, the ceasefire agreement remains in effect."

While the decline in Bitcoin prices was triggered by the resurgence of the US-Iran conflict, technical selling pressure cannot be ignored. On August 6, Bitcoin prices broke through $82,000, hitting a resistance zone of $82,000 to $95,000, which inevitably invited selling from trapped positions. In other words, even without the catalyst of the US-Iran news, Bitcoin prices would have faced a technical correction, potentially descending to $75,000. However, if BTC can hold the $80,000 level today, it may challenge the next milestone of $90,000 in May.

Bitcoin price chart, source: TradingView