Bitcoin bounces to $72.5K as markets react to US Strait of Hormuz blockade

Bitcoin (BTC) reversed its losses after Monday’s Wall Street open as markets digested the newest developments in the US-Iran war.

Key points:

• Bitcoin joins US stocks in a relief bounce despite the US blockade of the Strait of Hormuz going ahead.

• The measures exclude shipping traffic from non-Iranian ports, analysis notes.

• BTC price perspectives warn of a fresh downward reversal next.

Crypto “panic has faded” over Iran

Data from TradingView showed BTC price action abruptly heading higher, reaching $72,530 on Bistamp.

The US blockade of the Strait of Hormuz began Monday at 10 a.m. EDT, but markets appeared relieved that traffic not going to or from Iranian ports would be unaffected.

According to trading resource The Kobeissi Letter, the US would “not impede freedom of navigation for vessels transiting ​the Strait ​of ⁠Hormuz to and from non-Iranian ports.”

“A successful blockade of Iranian ports would cut off the majority of the already restricted oil exports from the region,” it wrote in a post on X, warning over US gas prices hitting $4.25 per gallon.

WTI crude oil circled $102 per barrel, having briefly retested the $100 mark that it passed at the start of futures trading.

US stocks, meanwhile, canceled out the initial downside from the news that negotiations between the US and Iran had failed.

Both the S&P 500 and Nasdaq Composite Index were green on the day at the time of writing.

Commenting, trading company QCP Capital flagged the increasing role of Chinese trade as a factor in the Iran saga.

“China sits at the centre of this. With Iranian crude largely flowing east, any blockade would cut directly into Beijing’s supply chain,” it wrote in its latest “Market Color” update. 

QCP argued that “even with a strong US naval presence, the question is not intent but enforcement.”

“Intercepting Chinese vessels in international waters would risk a materially larger escalation, and markets are not priced for that outcome. Instead, they are leaning on a familiar playbook: rhetoric escalates, reality softens,” it continued.

Trader warns of “Bart Simpson” BTC price reversal

Traders maintained a risk-off stance on short-term BTC price action.

Related: Oil price surges 8% on Iran tensions: Five things to know in Bitcoin this week

Trader Jelle warned that BTC/USD may print a classic “Bart Simpson” failed breakout pattern next, effectively erasing its gains from earlier in April.

“As said earlier today, eyes on $70.5k,” he advised X followers.

In a previous post, Jelle said that Bitcoin’s bear flag pattern on daily time frames was “still in play.”

As Cointelegraph reported, the pattern threatened a repeat of the January price action, with Bitcoin risking new macro lows.

In his latest analysis, meanwhile, trader CrypNuevo saw few actionable moves in the current trading range.

“It's the clearest chart in a long time: Nothing to do here at mid-range - wait for price to trade at one of the extremes, probably this week or the next,” an X thread on Sunday stated.

CrypNuevo flagged the area between $59,000 and $61,000 for entering swing long positions.