Explosions have once again echoed through the Strait of Hormuz, swiftly extinguishing the nascent hopes for a recovery in the cryptocurrency market. In early Asia-Pacific trading on Monday, Bitcoin tumbled by as much as 2.4% to $62,600, breaching its critical 200-week moving average, a level widely regarded as a bull-bear demarcation line. Data from CoinGlass shows that over the past 24 hours, more than 67,000 traders globally were liquidated, with total liquidations amounting to $236 million. Ethereum fell in tandem, dropping 2.5%. Futures for the three major U.S. stock indices, along with gold and silver, all declined sharply, while international oil prices surged significantly. WTI crude oil jumped over 3% to $74.1 per barrel, and Brent crude rose over 3% to $78.8 per barrel.
Escalation in the Strait of Hormoz
Tensions between the U.S. and Iran over the Strait of Hormuz escalated sharply over the weekend. U.S. Central Command stated that at 17:00 Eastern Time on the 12th, U.S. forces initiated a new round of strikes against Iran, aiming to "continue degrading its ability to attack commercial vessels in the Strait of Hormuz." This marks the fourth U.S. strike against Iran within a week, following previous attacks on approximately 140 Iranian military targets, including missile and drone launch sites, naval assets, and ammunition storage facilities.
Iran responded swiftly. According to Iranian media reports in the early hours of the 13th, more than 10 explosions were heard in the southern Iranian port of Bandar Abbas and the Sirik region, five explosions were reported in Jask, and multiple blasts were heard on Qeshm Island. Iran's Islamic Revolutionary Guard Corps Navy announced early on the 12th that the Strait of Hormuz would be closed until further notice.
Merely 25 days after the signing of a memorandum of understanding between the U.S. and Iran in mid-June, the ceasefire agreement appears to be in tatters. The Iranian Foreign Ministry condemned the U.S. government in a statement, accusing it of "almost openly violating nearly the entire content of the agreement." Meanwhile, former U.S. President Donald Trump insisted in an interview that the Strait of Hormuz "is open," placing the blame on Iran.
While both sides present conflicting narratives, the market recognizes only one fact: this critical energy chokepoint, which handles approximately 20% of global crude oil and LNG shipments, has once again plunged into a state of high uncertainty.
Market Chain Reaction: The 'Inflation Panic' Transmission from Oil to Interest Rates
The surge in oil prices is activating a market transmission path that is most concerning to investors. The sharp rise in oil prices is the starting point of this chain. Brent crude jumped from around $72 to over $78, a gain exceeding 3%. The market is digesting the risk of a sustained decline in actual shipping volumes through the Strait of Hormuz, fueled by the new attacks and weekend reports that Iran expanded its strike targets to include Qatar and the UAE.
Inflation expectations have subsequently heated up. Energy prices are the most sensitive leading indicators for inflation. The Federal Reserve's Monetary Policy Report submitted to Congress last Friday already warned that U.S. inflation had intensified further this spring, attributing it partly to "increased war-related energy costs due to the Gulf conflict."
Expectations for interest rate hikes have consequently resurfaced. The dot plot from the June FOMC meeting showed that 9 out of 18 policymakers projected at least one rate hike within 2026. The market fears that if persistently high oil prices push CPI above expectations, the Fed could adopt a more hawkish stance at its July 28-29 meeting. The CME FedWatch Tool indicates that the market widely expects at least one Fed rate hike this year, with the probability of a September hike exceeding 50%.
Risk assets are consequently under pressure. Bitcoin, as a speculative asset offering no yield, naturally loses appeal in a rising interest rate environment. Gold, despite its safe-haven properties, is also being sold off under the logic of "oil prices pushing inflation, and inflation pushing rate hikes"—spot gold fell over 1%, breaking below $4,100 per ounce. Richard Galvin, Executive Chairman of cryptocurrency investment firm DACM, stated bluntly, "This sell-off is due to weakness in U.S. index futures trading and a surge in oil prices caused by the escalating situation in Iran."
Technical Warning Signal: The Historical Significance of Losing the 200-Week Moving Average
The most alarming signal from this decline is Bitcoin's breach of its 200-week moving average. This moving average has been viewed as a hallmark support level marking the bottom of every Bitcoin bear market since 2015. It smooths out nearly four years of weekly prices, filtering out daily noise, and has accurately captured the bottom of every major historical cycle for Bitcoin. Currently, this average sits roughly in the $59,000 to $61,000 range. Bitcoin's June monthly close was below this line, marking the first such occurrence since the previous bear market. Several analysts warn that if this support fails, the next deeper foundational support lies near the network's aggregate realized price, around $54,000 to $54,900.
Tony Sycamore, an analyst at IG Australia, cautioned, "Higher-than-expected CPI data could strengthen market expectations for a Fed rate hike before the end of the year, which would put pressure on Bitcoin."
A Glimmer of Hope: ETFs End Eight-Week Outflow Streak, But Momentum Remains Weak
Amid the prevailing pessimism, there remains one positive signal worth noting. U.S. spot Bitcoin ETFs recorded a net inflow of $197.4 million for the week ending July 10, abruptly ending a streak of eight consecutive weeks of net outflows since May. BlackRock's iShares Bitcoin Trust was the primary driver, attracting a substantial $291.9 million in a single week. However, the scale of this reversal remains limited. Since May 11, investors have withdrawn approximately $8.26 billion from these funds. The latest $197.4 million inflow represents only about 2.4% of the previous withdrawals. As analysts point out, this is a "recovery signal worth watching, but it is still in its early stages."
The Upcoming 'Super Risk Window': CPI Data and Chairman Warsh's Congressional Debut
The true test for the market lies ahead. On Tuesday, the U.S. Bureau of Labor Statistics will release June CPI data. Market expectations are for headline CPI to decline 0.1% month-over-month, with core CPI rising 0.3%. However, if the actual data comes in hotter—considering the lagged effect of the recent oil price spike—it would directly reinforce expectations for Fed rate hikes. The current year-over-year CPI remains high at 4.2%, significantly above the Fed's year-end PCE forecast of 3.6%.
On the same day, Federal Reserve Chairman Kevin Warsh will testify before Congress for the first time in his capacity as Chairman. He is scheduled to appear before the House Financial Services Committee on July 14 and the Senate Banking Committee on July 15. The market will closely scrutinize any changes in his wording regarding the interest rate path, inflation assessment, and balance sheet policy. Warsh has already explicitly opposed issuing forward policy guidance at the June FOMC meeting, meaning the market will rely entirely on economic data to gauge future policy direction. This week's CPI data and Warsh's testimony will be key inputs for the market to judge whether the FOMC will hike rates at its July 28-29 meeting.
Sycamore added that if CPI data is in line with or below expectations, it would validate Warsh's previous view that inflationary pressures are easing.
Conclusion: The 'Oil-Inflation-Rates' Chain is Back in Motion
Bitcoin is undergoing a "passive sell-off" driven by external macroeconomic forces—the price is not being driven by structural changes within the crypto market itself, but rather by explosions in the Strait of Hormuz, sharp jumps in oil prices, and the repricing of Fed rate hike expectations. Bitcoin's current price remains approximately 50% below its all-time high from October 2025, and overall market sentiment remains bearish. With multiple pressures from escalating U.S.-Iran conflict, impending inflation data, and an uncertain Fed policy path, volatility in the cryptocurrency market may intensify further.
This week's CPI data and Chairman Warsh's congressional testimony will be crucial variables determining whether Bitcoin can hold the $60,000 level. If inflation exceeds expectations and Warsh delivers hawkish signals, Bitcoin could decline further towards the $54,000 to $55,000 "realized price" zone. If the data is moderate and Warsh's tone is balanced, then the $197.4 million ETF inflow could become an early signal of a sentiment shift. For now, Bitcoin's price action is increasingly dictated by shipping lanes in the Strait of Hormuz and the prepared remarks of the Fed Chairman, rather than the internal narratives of the crypto market itself.
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