- A crypto market rally is underway despite the elevated risks in the market.
- The US announced a major naval blockade to put more pressure on Iran.
- The crypto rally is a sign that investors expect negotiations before the ceasefire ends.
A crypto rally is happening today, even as geopolitical risks rise amid the ongoing blockade of the Strait of Hormuz. Bitcoin price jumped to $74,400 on Tuesday, while the market capitalization of all tokens soared by over 4%. Some of the top gainers included RaveDAO, Venice Token, Aave, Algorand, and Hyperliquid.
Crypto Rally Happens Amid US Blockade of the Strait of Hormuz
Bitcoin and top altcoins rose after the recent talks between the United States and Iran ended without a deal, with each side trading blame.
The situation escalated after the US announced the first naval blockade of the Strait of Hormuz, a move that aims to starve Iran of oil exports. It also aims to prevent Iran from charging a toll at the Strait.
Iran, on the other hand, has warned its neighboring countries that their ships will be prevented from using the Strait. This, in turn, will bring their oil exports much lower.
Therefore, the ongoing crypto rally is driven by investors’ optimism that the two sides will resume talks before the two-week ceasefire ends.
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This explains why crude oil prices rose more slowly than one might expect. After rising to over $105 on Monday, Brent and West Texas Intermediate (WTI) oil benchmarks have dropped to $97 and $96, respectively.
Similarly, global indices like the Nikkei 225 and the Hang Seng were in the green on Tuesday. Futures tied to the Dow Jones Industrial Average and the S&P 500 also rose modestly.
Potential Escalation May Undo the Crypto Market Rally
Still, there is a risk that the ongoing crypto market rally will be short-lived as Iran, Israel, and the United States may escalate the war. Trump has warned that the US military will remain in the region. Also, there are signs that the US has used the ceasefire to increase weapon supply in the region.
Therefore, the crypto rally may be brief, and Bitcoin and most altcoins may retreat in the coming weeks. One major risk, as BanklessTimes recently reported, is that Bitcoin has formed a bearish flag pattern, a pattern composed of a vertical line and an ascending channel. It also remains below all moving averages, suggesting a near-term retreat.
Additionally, recent data shows that investors have taken advantage of crypto market rallies to dump tokens. Therefore, a complete recovery will be confirmed when Bitcoin and top altcoins move above their short- and long-term moving averages.
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