Fresh tensions in the Strait of Hormuz have rattled global cryptocurrency markets, reversing a recent rally and triggering widespread sell-offs across major digital assets.
On May 8, renewed military exchanges between the United States and Iran unsettled investor sentiment, pushing the market into decline. Bitcoin dropped more than 1%, briefly falling below the crucial $80,000 mark. Ethereum slipped nearly 2% to around $2,300, while XRP lost over 2%, dipping below $1.40. Meanwhile, Dogecoin saw sharper losses of about 4%, retreating close to the $1 level.
The downturn followed reports of a naval confrontation in the Gulf. According to the United States Central Command, a U.S. Navy destroyer group came under attack while transiting the Hormuz corridor, prompting retaliatory strikes on Iranian military positions. Iranian officials, however, accused U.S. forces of breaching a ceasefire by targeting vessels and coastal areas, leading to a counter-response.
The escalation abruptly halted what had been a strong upward trend in crypto markets. Bitcoin had recently surged past $82,000, leading gains across the sector, with several altcoins posting notable increases. That momentum quickly reversed as leveraged traders faced heavy losses. Data from CoinGlass shows that more than 110,000 traders were liquidated within 24 hours, with total losses reaching $344 million—most of them from long positions.
Market sentiment has also shifted significantly. The crypto fear and greed index dropped from 62 to 47, moving from “greed” into “neutral-to-fear” territory, reflecting growing caution among investors.
Despite the flare-up, signs of restraint from both sides suggest the situation may not escalate further. Donald Trump stated that the ceasefire remains in place despite the exchange of strikes, indicating efforts to contain the conflict.
Analysts note that while geopolitical tensions triggered the immediate sell-off, underlying technical factors also point to a potential correction. Bitcoin’s recent rally encountered strong resistance in the $82,000–$95,000 range, an area likely to attract selling pressure. As a result, a short-term pullback toward $75,000 remains possible.
However, if Bitcoin manages to hold above the $80,000 threshold in the near term, market watchers say it could regain momentum and target higher levels, potentially approaching $90,000 later in May.
