The crypto market took a hit on Monday as tensions between Iran and the US reignited over the Strait of Hormuz, causing a selloff in risk assets. The price of Bitcoin (BTC) fell by about 1%, while Lighter (LIT) dropped 8% in its first significant pullback after rallying 200% in two months.
The Middle East hostilities weighed on equities as well, with South Korea's Kospi index losing 9.2% and Japan's Nikkei and China's SSE both falling more than 2%. The US equities were also indicated to open lower, with Nasdaq 100 index futures and S&P 500 futures losing 0.9% and 0.25%, respectively.
The crypto market's weekend gains gave way to a Monday selloff, which could be attributed to both profit-taking and the renewed tensions in the Middle East. The derivatives positioning held steady this week, with open interest (OI) remaining at $17 billion and funding rates showing little change to positive across multiple venues.
Options positioning has tilted bullish, but the market's volatility environment remains calm according to the term structure, which implies traders see a low-risk situation.