What to know:

A brief Sunday rally didn't survive contact with Monday.

Bitcoin slid to $66,702 in early Monday trading, down 1.1% over the past 24 hours, as traditional markets reopened and began pricing the U.S.-Iran conflict that crypto had been trading in isolation since Saturday.

Sunday's bounce to $68,000 on the Khamenei confirmation has now been mostly unwound, with the market settling back into the mid-$66,000 range that preceded the strikes.

The broader crypto picture was mixed. Ether fell 2.5% to $1,967, solana dropped 4.1% to $84, and XRP lost 3.6% to $1.36. The weekly numbers paint the real damage, with solana down 8.1% over seven days to lead losses among majors.

Traditional markets told the story crypto was anticipating. Brent crude surged as much as 13% at the open before settling around $77.50, still up 6.4%, the biggest jump since Russia's invasion of Ukraine in 2022.

The Strait of Hormuz, through which roughly a fifth of the world's oil flows, is effectively closed, per Bloomberg. Asian equities dropped 1.4% and U.S. equity futures fell 0.7%. Gold climbed to $5,350 an ounce.

The oil move is what matters most for crypto's near-term direction. Higher energy prices feed directly into inflation expectations, which push back the timeline for Fed rate cuts, which tighten the liquidity conditions that drive risk asset prices.

But the situation remains fluid. Conflicting reports emerged Monday about whether Iran is seeking to resume nuclear talks with the U.S. The Wall Street Journal reported a fresh push to negotiate, while Iran's national security chief Ali Larijani said the country won't negotiate.

Earlier Sunday, Trump said the bombing campaign will continue until objectives are achieved, though The Atlantic reported he agreed to talk with Iran's new leadership.

Meanwhile, some crypto traders say further downside risks for the market could be limited.

"Given that Iran has been isolated from global financial markets for quite some time, we believe that downside risk is limited," said Jeff Mei, chief operating officer at BTSE.

"Some have been concerned about oil prices and their potential impact on inflation, but the world has been weaned off Iranian oil and increased supply from OPEC and the U.S. should be enough to stabilize prices."

Whether that proves right depends on whether the Strait of Hormuz reopens and how long Trump's "objectives" take to achieve. Until both of those questions have answers, crypto trades as a risk asset in a world that just got riskier.