The Crypto Market Under the Hormuz Strait Crisis: Geopolitical De-sensitization and a Bottom-Fighting Battle

In July 2026, tensions between the US and Iran over the Hormuz Strait escalated again. The US issued a final ultimatum demanding Iran stop attacks on merchant ships. However, compared with the first clash four months earlier—when Bitcoin plunged nearly 10% in two days—the reaction now is strikingly different. The current BTC price is holding steady around $64,000, with very small intraday swings. Drawing on the latest on-chain data, ETF fund flows, and expectations for Federal Reserve policy, this article delves into the “de-sensitization” phenomenon in the crypto market toward geopolitical risk, examines Bitcoin’s bottom-building logic around $60k, and offers strategy suggestions for investors under the current market conditions.

1. From Panic to Calm: Two Market Reactions to the Same Geopolitical Event

On the second weekend of July 2026, the Hormuz Strait once again became the global focus. The US drew a deadline for Iran, demanding it commit to stopping attacks on ships transiting the strait. This waterway carries one-fifth of the world’s oil transport; every time the situation fluctuates, it tugs at the nerves of energy prices and risk assets.

Yet this time, the market’s reaction was unusually calm.

According to Yahoo Finance data, as of July 10, Bitcoin’s closing price was $64,183.85. Since June 30’s low of $58,558.86, it has rebounded more than 9.6%. Although news about escalation in the US-Iran conflict hit during the period, price volatility stayed within a narrow range of $60k to $65,000 throughout the day. In the same period, Ethereum rose from $1,569.58 to $1,769.30, a rebound of about 12.7%.

Compared with the market performance four months earlier, the contrast is stark. At the end of April 2026, when Trump ordered the US military to prepare for a blockade of the Hormuz Strait, Bitcoin fell by nearly 10% within two days and the total liquidation amount across the whole market exceeded $60k. At that time, the market generally viewed crypto assets as an “amplifier” of geopolitical risk; any hint of trouble triggered aggressive capital flight.

Just three months later, with geopolitical conflict intensity not decreasing, the market did not even splash water. This is not market numbness—it is de-sensitization after repeated tug-of-war.

2. The Threefold Logic Behind De-sensitization

1. Repeated game over the news: From “wolf is coming” to “is the wolf really here?”

Over the past more than three months, negotiation headlines between the US and Iran have been shuffled back and forth dozens of times. From June 15, when both sides agreed on a memorandum of understanding, to June 18, when Trump signed a copy of the agreement, to June 20, when Iran announced closing the strait, and June 23, when it reopened again—continuing all the way to early July when the US issued its final ultimatum—each piece of news had previously triggered market fluctuations. But after the same script kept repeating, the market finally learned to filter out noise.

The key difference now is: there is no real, comprehensive exchange of fire, and no substantive blockade of the strait. Iran’s foreign minister visited Oman on July 11 to discuss shipping security; Qatar’s negotiation representative also arrived in Tehran to continue brokering. US officials revealed that Iran privately indicated attacks on merchant ships were an “error” by some hardliners, not an officially established strategy. Diplomatic channels have remained open, and the probability of a true slide into full-scale war is not high.

2. On-chain data reveals: The market is building a cyclical bottom

CryptoQuant data shows that Bitcoin’s realized profit-loss ratio fell to -0.35 in early July, the lowest level since the FTX collapse in December 2022. Historically, after the indicator recorded the same readings in 2015, 2019, and 2022, it tended to trigger large rebounds rather than further crashes.

More worth attention is that the position size of long-term holders has refreshed an all-time high (about 16.1 million BTC). In the late June period, “whale” addresses withdrew more than 11,400 BTC (about $700 million) from exchanges to cold wallets. On July 11, MicroStrategy continued to add around 1,587 BTC (about $100 million). The corporate coin-hoarding trend remains strengthening. Michael Saylor publicly said that Bitcoin has completed bottoming around $60,000, and the market is moving from “winter” into “spring.”

3. A complex macro backdrop: Fed hawkishness and sticky inflation

The Federal Reserve currently keeps interest rates in the 3.5%–3.75% range. In the June FOMC meeting, the wording “inclination toward easing” was removed, and the 2027 end core PCE inflation forecast was raised from 2.7% to 3.6%. Deutsche Bank predicts the Fed could total 50 basis points of additional rate hikes in 2026, pushing the federal funds rate up to 4.1%.

This macro backdrop continuously weighs on the crypto market. In June, US spot Bitcoin ETFs recorded $4.06 billion in net outflows, the largest monthly redemptions since funds were launched in January 2024. Hedge funds and brokerages cut ETF holdings sharply: Jane Street reduced holdings by about 70%, and Morgan Stanley closed all of its positions of roughly 8,300 BTC.

But historical data shows that ETF outflows often have cyclical rather than structural characteristics. Since 2026, there have been three “outflow-rebound” cycles. In each case, after institutions trimmed holdings, a new round of buying typically returned.

3. A Panorama of the Market’s Key Indicators

Price level: On July 10, Bitcoin closed at $64,183.85, down about 49% from the $126,000 all-time high in October 2025. Ethereum closed at $1,769.30, down about 64% from the nearly $5,000 peak in August 2025.

Fear and Greed Index: Currently around the 22–25 range, it is in “extreme fear,” but it has recovered from the 11 reading historical low on July 1. The average over the past seven days is about 22, showing that market sentiment is gradually repairing.

Key support and resistance: Bitcoin’s first near-term resistance is $65,000–$65,672 (50-day moving average). The strong resistance level is $75,000. The first support is $58,000–$60,000, and the extreme support is $52,000. Polymarket predicts a 71% probability that Bitcoin reaches $65,000 in July, while the probability of reaching $70,000 is only 24%.

ETF fund flows: After the record net outflows in June, early July saw a clear slowdown in outflow speed. Standard Chartered keeps its 2026 year-end target price at $100k unchanged. Bernstein also sticks to a $150k target price, viewing the current period as one of Bitcoin’s most mild bear-market scenarios in history.

4. Investment Strategy: Finding Certainty Amid Uncertainty

Short-term strategy (1–4 weeks)

In the weekend window of the current final ultimatum, if the situation worsens beyond expectations, preemptive risk-avoidance sell pressure may appear during Asian trading hours. It is recommended to keep exposure light over the weekend and wait to make decisions after Monday when the situation becomes clearer. Technically, Bitcoin needs to break above $65,672 (the 50-day moving average) to confirm that the downtrend has ended.

Medium-term strategy (1–3 months)

July is Bitcoin’s strongest summer month in history; over the past 13 years, the average gain has been 7.6%. With the realized profit-loss ratio having bottomed, long-term holders continuing to accumulate, and the trend of corporate coin-hoarding continuing—these on-chain signals together point to a view that the current price range could be an important bottom region for this cycle. Still, investors need to watch for potential shocks from the Fed’s rate decision on July 29.

Long-term allocation logic

The impact of geopolitical news on price always depends on substantive developments rather than the intensity of verbal threats. Once the market becomes immune to repeatedly appearing signals, what truly determines price direction is fundamentals and certain events. The “digital gold” narrative for Bitcoin has not been weakened by short-term volatility; instead, the pace of institutional infrastructure building is accelerating amid fear.

For risk-asset allocation, it is recommended to maintain a “gold anchor + crypto growth” combination structure: allocate 30%–40% of the portfolio to gold as a risk-control anchor, leveraging its safe-haven attributes during geopolitical crises; place the remaining funds into Bitcoin and high-quality major coins, gradually building positions within the current extreme fear range rather than waiting for “certainty” signals. Because when certainty arrives, the price usually is already far away from the bottom.

Every spark from the Hormuz Strait could, under specific conditions, turn into a wildfire. But under the de-sensitization effect from repeated stalemates, the market has already learned to distinguish “noise” from “signal.” In July 2026, the crypto market is standing at a critical crossroads: one side is ongoing disruption from geopolitical uncertainty, the other is bottom-building signals emitted by on-chain data. Until the dust settles, staying patient, controlling position sizes, and focusing on substantive progress rather than verbal posturing may be the best solution for dealing with the current complex environment.

Disclaimer: This article is for market analysis and information sharing only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make prudent decisions based on their own risk tolerance.

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