Crypto and the wider markets tumbled on Monday as the US and Iran escalated threats toward one another for the fourth week, sending oil prices seesawing. 

US President Donald Trump posted to Truth Social on Sunday that the US would “hit and obliterate” Iranian power plants, “starting with the biggest one first,” if the country didn’t open the Strait of Hormuz within 48 hours.

Iran responded by saying it will answer any US strikes on its power or water infrastructure with attacks on US and Israeli assets in the Gulf and threatened to completely close the Strait, one of the world’s vital oil shipping lanes. 

Bitcoin , long seen by its backers as a so-called “safe-haven” asset like gold, dropped1.8% in the last 24 hours to $68,160, recovering from a low of below $67,600 in late trading on Sunday.

Bitcoin’s price drop caused a surge in liquidations across crypto, with $336.3 million wiped from the market in the last day, with nearly a third of the volume, or $100 million, caused by failed Bitcoin long bets, according to CoinGlass.

Rachael Lucas, an analyst at the crypto exchange BTC Markets, told Cointelegraph that crypto “is trading in lockstep with equities right now, not as a haven, and sentiment is sitting at historic lows, with the Fear and Greed Index deep in ‘extreme fear’ territory at 8.”

Oil volatility spikes as Asian equities decline

Stock markets around Asia also reacted to the escalating threats, with Australian and New Zealand markets both down 0.8%, while Japan had fallen over 4%.

The price of crude oil briefly spiked to a high of just over $100 a barrel in early trading on Monday before quickly dropping to $97.20. It has since steadily climbed to $99.30 at the time of writing. 

Meanwhile, Brent crude oil, considered a benchmark for purchasing oil worldwide, jumped to over $114 per barrel but settled below $113.

Lucas said that the future of crypto markets hinges on the de-escalation of the Iran war and the decisions of the US Federal Reserve.

She added that Brent’s price jump “is feeding inflation expectations, and the probability of a Fed rate hike has jumped from zero to 12.4% in a single week.”

“That is a significant macro repricing that crypto will continue to reflect until there is clarity on both fronts,” she added.

Lucas said if the Iran war de-escalates, “crypto would be among the fastest risk assets to recover. However, this conflict has no clear negotiating counterpart and no defined exit timeline, which makes that outcome difficult to call in the near term.”

She added that $68,000 is the “immediate level” to watch for if Bitcoin has support, with $65,800 being “the next meaningful support if that gives way.”

“To the upside, Bitcoin needs to reclaim $71,500 before any recovery narrative gains credibility,” Lucas said.

She added that Bitcoin still had strong institutional support, with $1.43 billion in net inflows to Bitcoin exchange-traded funds so far this month.

“When sentiment is this low and institutional infrastructure is this strong, history suggests the setup for recovery is building, even if the timing remains uncertain,” Lucas said.