Bitcoin dropped about 1 percent to $66,772 on Monday morning in Asia. This decline is relatively modest. Stock exchanges across Asia reacted far more sharply to the US and Israeli airstrikes against Iran on February 28. Specifically, the Nikkei 225 lost more than 2.5 percent.
The Hang Seng in Hong Kong and the Straits Times Index in Singapore each fell nearly 2 percent. S&P 500 futures also traded 1.4 percent lower. Commodity markets, however, painted a different picture. Brent Crude surged 7 percent to around $78 per barrel. Gold gained 1.9 percent to $5,381 per ounce. Both assets benefited from a flight to crisis hedges. Bitcoin, meanwhile, oscillated between $63,000 and $66,000 over the weekend before recovering.
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Crypto markets as a weekend barometer
The airstrikes under the name "Operation Roaring Lion" began on Friday after the US market close. Traditional exchanges remained shut. Crypto exchanges, by contrast, kept running and served as the only trading platform during the crisis. Bitcoin initially fell to a daily low of $63,030. In total, the loss for that week came to about 2.8 percent.
At the same time, the market absorbed severe shocks. Forced liquidations totaled over $651 million within 24 hours. Funding rates on Bitcoin futures dropped to minus 6 percent. Also, the Fear and Greed Index sank to 11, its lowest level in months. Decentralized exchanges like Hyperliquid played an important role. Specifically, oil futures on those platforms rose 6.2 percent and gold futures gained 5 percent. These platforms captured volume that would otherwise flow through commodity markets.
The initial sell-off in Bitcoin followed the pattern of earlier crises. Yet the speed of the recovery stood out. After Iranian media confirmed the death of Ayatollah Ali Khamenei on March 1, Bitcoin briefly jumped to around $68,000. Markets likely interpreted the news as a signal that escalation could end. Ethereum lost 2.2 percent to $1,971, a slightly steeper decline. Still, stablecoins showed no major dislocations.
Strait of Hormuz as the biggest risk
The escalation extends well beyond an airstrike. Attackers also targeted three ships near the Strait of Hormuz, including the Palau-flagged "Skylight." Maersk subsequently halted all transits through the Strait of Hormuz and Bab el-Mandeb. As a result, roughly 170 cargo ships are stuck in the strait.
About 20 percent of global oil flows through the Strait of Hormuz, approximately 15 million barrels per day. War risk premiums for shipping rose by around 50 percent. Rerouting via the Cape of Good Hope adds 10 to 14 days. Should the strait remain closed, Brent could climb above $120 per barrel according to UBS.
Escalation determines the direction
Trump described the operation as a matter of "four weeks or less." He also announced retaliation on Truth Social for three US soldiers killed in Kuwait. Iran declared 40 days of national mourning and installed a transitional council under President Pezeshkian. Meanwhile, the UAE closed both exchanges in Abu Dhabi and Dubai. As long as the Strait of Hormuz remains blocked, the risk premium across markets is likely to persist.
