On Friday, the cryptocurrency market experienced a 2.5% decline, with its total market capitalization falling to $2.45 trillion. This downturn is linked to the fading hopes for an end to the US-Iran conflict.
Liquidations occur when traders' margin accounts cannot support their positions due to significant market volatility. When long positions are liquidated, they are forced to sell assets, further intensifying downward price pressure.
Asian tech stocks, including Japan's Nikkei 225, Hong Kong's Hang Seng Index, and South Korea's KOSPI, all saw declines shortly after the news broke. Even gold, considered a safe-haven asset during economic stress, fell 2.9% to below $4500 on the same day. Silver dropped 6% to $68.
Meanwhile, oil prices strengthened again as the Strait of Hormuz remained closed for the fourth consecutive day. On Friday, WTI crude oil futures rose 3.3% to over $93 per barrel, while Brent crude prices increased by 3.7% to above $106 per barrel.
The closure of this critical maritime route has severely disrupted global oil supply, resulting in the loss of millions of barrels of supply daily. This has fueled concerns about soaring inflation and supply chain crises, potentially delaying hopes for interest rate cuts by the Federal Reserve this year.
Risk assets, including cryptocurrencies, tend to rise when liquidity is abundant or when the market anticipates interest rate cuts, and typically fall when central banks maintain a hawkish monetary policy stance.