Iran may close the Strait of Hormuz as Bitcoin falls below 100,000 USD

Recently, the Iranian Parliament's National Security Committee concluded that it recommends closing the Strait of Hormuz, but the final decision still rests with the country's Supreme National Security Council. This news triggered severe fluctuations in the crypto assets market. Bitcoin's price rapidly declined from $102,810, briefly falling below the $100,000 mark, hitting a low of $98,200, and then rebounding to around $100,800. Ether was not spared either, with its price dropping to $2,111, showing a downward trend for four consecutive days. Other crypto assets like Solana also experienced significant declines, dropping 3.45% to $126 within 24 hours.

The contract market is also affected. Data shows that the total liquidation amount across the network reached 658 million USD within 24 hours, with a significant proportion of long positions liquidated, amounting to 526 million USD. The largest single liquidation occurred on a certain trading platform's BTC-USDT contract, valued at 35.4503 million USD.

The Strait of Hormuz, as a crucial oil transportation route worldwide, holds significant strategic importance. This strait connects the Gulf of Oman and the Persian Gulf, serving as the sole maritime passage for oil from the Gulf region to the rest of the world, with approximately one-third of global maritime crude oil trade passing through here. Iran possesses several strategic locations along the western coast of the strait, including highlands, bunkers, and key islands, and if it decides to block the strait, it can quickly establish a "layered fire blockade network."

However, historical experience shows that Iran has threatened to block the Strait of Hormuz multiple times but has never actually carried it out. For example, during the Iran-Iraq War in the 20th century and in recent years after the United States withdrew from the Iran nuclear deal, Iran has issued similar threats but ultimately did not follow through.

Blocking the Strait is a double-edged sword for Iran. On one hand, it may impact the international oil market; on the other hand, Iran's own economy heavily relies on exporting energy through this strait. If the strait is closed, Iran's economy will suffer a heavy blow, the lives of its people may become more difficult, and it could further exacerbate the regime's legitimacy crisis. In addition, this action may further worsen Iran's international relations, making it more isolated on the global stage.

Some experts believe that, considering rationally, Iran may ultimately not decide to block the Strait. The disadvantages of such a blockade outweigh the benefits for Iran. Currently, the international community's attitude towards Iran is relatively sympathetic. If a blockade is implemented, it may provoke opposition from various countries and reverse the favorable international public opinion situation for itself.

U.S. officials have also stated that Iran's blockade of the Strait of Hormuz could deal a devastating blow to its economy, believing that Iran is unlikely to make such a decision.

In this situation, the Crypto Assets market is reacting violently. Some traders have indicated that, given the impact of the U.S. bombing operations and the potential closure of the Strait of Hormuz, the market has already experienced sufficient washout, and now may be the time to "buy on dips."

However, some analysts have pointed out that Bitcoin demand is cooling off after a rapid increase recently. Although spot demand is still growing, the pace has slowed down. Large investors and ETF's Bitcoin purchase volume has halved, and the demand from new investors is also declining. In the futures market, investors have recently chosen to take profits and have started to establish new short positions.

If demand remains weak, Bitcoin may find support around $92,000, which corresponds to the on-chain actual cost for traders and is a typical support area during a bull market. If this support fails, the next support level could be around $81,000.

For Ethereum, some analysts believe that it may not be the best time to buy the dip currently. Data shows that 55% of the circulating chips are still in profit. Historical experience indicates that only when the majority of circulating chips are in a loss state can more attractive buying opportunities arise.

Nonetheless, some industry insiders remain optimistic. They believe that if the situation in the Middle East does not deteriorate further in the coming days, the crypto assets market may experience a significant rebound.