Crypto Market Tensions Rise as Iran Closes Strait of Hormuz

• Iran shuts Strait of Hormuz, threatening a route that carries 20% of global daily oil consumption.
• Crypto derivatives see $1.8B in hourly sell volume as traders unwind positions amid rising tensions.
• Crypto market cap rises by 1.49% to $2.33T as Fear & Greed Index remains in fear at 20.

Global markets entered a volatile phase after Iran officially closed the Strait of Hormuz and warned that any vessel attempting to transit the waterway would be set on fire.

The announcement followed U.S. and Israeli strikes on Iran on February 28 and afterward missile exchanges across the Gulf region. As oil traders assessed possible supply disruptions, cryptomarkets recorded heavy derivatives activity before stabilizing later in the session.

Strait of Hormuz Closure Heightens Oil Supply Risks

Ebrahim Jabari, a senior adviser to the commander-in-chief of Iran’s Islamic Revolutionary Guard Corps, said the strait has been sealed and that both Revolutionary Guards forces and the regular navy would target ships attempting passage.

The Strait of Hormuz links major Gulf oil producers, including Saudi Arabia, Iran, Iraq, and the United Arab Emirates, to the Gulf of Oman and the Arabian Sea. At its narrowest point, the waterway is about 33 kilometers wide, and roughly 20% of global daily oil consumption passes through it. Consequently, any sustained disruption could materially affect global crude flows.

The closure followed U.S. and Israeli strikes targeted at Iran’s leadership. In response, Iran launched missile barrages toward Gulf states hosting U.S. military bases, including Qatar, Kuwait, and Bahrain, while also firing missiles toward the United Arab Emirates, Saudi Arabia, and Oman.

Crypto Derivatives Face Rapid Liquidations

In addition to the broader risk-off environment, crypto markets reflected heightened uncertainty. Data from CryptoQuant showed approximately $1.8 billion in derivative sell volume within one hour on Saturday. At the same time, the platform’s derivatives pressure index declined, indicating strong seller dominance.

Despite the initial wave of liquidations, broader market metrics later showed stabilization. The total crypto market capitalization reached $2.33 trillion, up 1.49% on Tuesday. Similarly, the CMC20 index rose 1.42% to 140.01 after an early spike, then consolidated sideways, suggesting momentum had moderated.

Bitcoin traded at $68,089 at the time of writing, posting a 1.7% gain over 24 hours. Following this, Stephen Coltman, Head of Macro at 21Shares, said markets are monitoring whether negotiations materialize or whether instability persists.

He added that conflicts typically raise commodity prices and widen fiscal deficits. Meanwhile, the Fear & Greed Index registered 20, placing sentiment firmly in the “Fear” zone.

Related: Arthur Hayes Says Iran Conflict Could Trigger Fed Easing, Boost Bitcoin