Crypto markets hold at 'inflection point' after bitcoin's dip on Middle East friction: analysts

Bitcoin floated around $102,000 on Monday afternoon, reversing a slide below $99,000 that wiped out more than $1 billion in crypto leveraged positions and slammed altcoins after U.S. missile strikes hit Iranian targets.

Derive.xyz reported a jump in short-dated implied volatility as traders digested the new risk. One-week IV spiked to 45% for bitcoin and 83% for ETH before easing about five points by press time, according to The Block's data. However, Derive said there’s more to come.

"Volatility markets are telling us this isn't over," Derive Head of Research Dr. Sean Dawson told The Block via email.

Iran's threat to close the Strait of Hormuz has been a drag on market sentiment, yet QCP Capital analysts note that options traders appear to be discounting the prospect of an imminent blockade. Coin Bureau founder Nic Puckrin called the potential blockade “economic suicide” for Tehran, adding that traders "read between the lines," which helped bitcoin bounce overnight.

Long-term catalysts

Long-short ratios still tilt slightly bearish, but the rebound may indicate resilience and growing confidence from increasing adoption.

On Friday, Texas became the third American state to pass laws establishing a strategic Bitcoin reserve. Michael Saylor’s Strategy bought more bitcoin as more companies and investors like Anthony Pompliano joined the crypto treasury rush. These updates lay the building blocks for a sustained uptrend once conflict in the Middle East and macro anchors subside to fundamentals, BRN lead analyst Valentin Fournier told The Block.

"Despite short-term volatility and risk-off sentiment, long-term structural demand is growing stronger. We remain constructive on Bitcoin’s resilience and believe Solana could outperform in a recovery. Ethereum has lost some institutional support short term but may regain ground as volatility cools," Fournier said.

Markets are now looking toward July 9, when President Donald Trump's 90-day tariff pause ends, and the July 30 Federal Reserve meeting. Although the CME FedWatch shows traders betting on no rate cut after Chair Jerome Powell's hawkish tone in June. QCP Capital said bitcoin and crypto may swing either way, depending on Fed updates and developments in the Middle East.

"The market remains at an inflection point, with digital assets straddling the line between risk-on momentum and risk-off defensiveness amid ongoing uncertainty," per QCP.