Bitcoin climbed above $71,000 Monday morning after President Donald Trump announced a five-day postponement of planned U.S. attacks on Iranian power plants, citing "very good and productive conversations" between the two nations. The cryptocurrency, which had fallen below $68,000 overnight, jumped roughly 5% alongside other major digital assets as markets interpreted the delay as a sign of potential de-escalation in Middle East tensions.
Trump's announcement on Truth Social described the talks as focused on achieving "a complete and total resolution of our hostilities in the Middle East." However, the rally began to lose steam later in the day after Iran's Fars news agency, citing an unidentified source, denied that any such conversations had taken place.
The cryptocurrency surge was part of a broader risk-on market reaction. Ethereum rose as much as 5%, while Dogecoin, Solana, and Chainlink all posted similar gains before retreating slightly after the Iranian response. Traditional markets also responded positively to the potential de-escalation.
The most dramatic moves came in energy markets, where oil prices plummeted on reduced war premium. West Texas Intermediate crude dropped 11% to below $88 per barrel, while Brent crude fell 8% to around $100 per barrel. The oil selloff triggered massive liquidations in tokenized crude futures, with CoinGlass data showing $62.41 million in liquidations on the XYZ:BRENTOIL contract over 24 hours—$61.69 million from long positions and just $717,000 from shorts.
Crypto-linked stocks also benefited from the rally. Galaxy Digital rose 2% in pre-market trading, while Coinbase and IREN each gained around 2%. MicroStrategy, the largest corporate holder of bitcoin, jumped more than 3%.
Despite the immediate market euphoria, options traders remained cautious about the sustainability of the rally. Put options on bitcoin continued trading at an 8-10 volatility point premium to calls through June expiry on Deribit, according to Amberdata. The same defensive positioning appeared in Ethereum options, suggesting traders view the bounce with skepticism and are bracing for potential aftershocks from recent oil volatility.
The five-day postponement represents a temporary pause rather than an end to hostilities, as Iran continues striking targets across the Gulf region and Israel would need to agree to any broader ceasefire. The conflicting reports about whether diplomatic talks actually occurred added to market uncertainty, with bitcoin retreating closer to $70,000 after Fars agency's denial.
The episode highlights cryptocurrency markets' continued sensitivity to geopolitical developments, particularly those affecting energy markets and global risk sentiment. While bitcoin has often been positioned as a hedge against traditional financial instability, its correlation with risk assets during crisis periods remains evident in trading patterns like Monday's rally.