On May 4, Bitcoin regained the $80,000 threshold and hit a three-month high of $80,617, pushing its market capitalization above $1.6 trillion.
Important points
- Bitcoin hit a three-month high of $80,617 on May 4, potentially marking the end of the latest crypto winter.
- Volatility led to $554 million in liquidations as Brent crude oil prices hit $115 amid tensions in the Strait of Hormuz.
- Economists have warned of a global recession unless the Trump administration and Iran reach a peace deal.
Ending the crypto winter
After early morning volatility related to tensions in the Middle East, Bitcoin regained its footing on Monday, rising above $80,000. The cryptocurrency’s all-time high fell to a session low of $78,203 at around 6:30 a.m. ET, but it surged back above $80,500 by mid-morning, essentially erasing losses and regaining momentum from Sunday night’s gains.
Prior to this intraday selloff, Bitcoin had soared to a staggering $80,617, its highest level in three months. This aggressive rally pushed the asset’s market cap past the $1.6 trillion milestone. This was a psychological breakthrough that solidified the narrative that the industry had finally emerged from the recent “crypto winter.”
Several factors accelerated the rise, with some analysts linking the initial rise to reports that the US Navy would escort a stranded transport ship in the Strait of Hormuz. The dangerous move by the US comes after a period of heated rhetoric between Washington and the Iranian government over the weekend. The latter seized control of important transport routes shortly after the start of the battle.
The blockade has increased pressure on Iran, but its refusal to bow to U.S. demands to reopen the strait to commercial shipping has caused oil prices and inflation to rise. With the war’s growing unpopularity at home, the Trump administration, eager to appease voters ahead of the midterm elections, has begun deploying warships to flashpoints to provide escorts. U.S. officials said Monday that two U.S.-flagged ships had already passed through without incident.
However, reports of an attack on a transport ship and claims by Iran’s Islamic Revolutionary Guard Corps that it had repulsed an advancing US naval ship spooked markets. Although US Central Command has dismissed the Iranian version of events, the situation has clearly escalated. The fire at the Fujairah oil terminal and the United Arab Emirates’ claim that it intercepted a missile fired from Iran highlighted the growing danger.
For shipping companies, the latest episode suggests that normal shipping through the strait will not resume unless the two belligerents reach a permanent peace agreement. Amid the lack of resolution, economists say the prospect of a global recession is increasing.
The skirmish pushed oil prices higher, with Brent crude hitting $115 a barrel at one point and West Texas Intermediate rising 3.3% to $105 a barrel. On Wall Street, the major indexes were slightly lower at press time after posting heavy losses earlier in the day. Conversely, Bitcoin reversed its early morning decline and returned to a 24-hour gain of over 2%.
This price movement wiped out nearly $270 million in leveraged Bitcoin positions and accounted for nearly $212 million in liquidated short sales. Overall, volatility across crypto markets led to the liquidation of $384 million in short bets and $170 million in long positions.
