How the Strait of Hormuz Blockade Impacts Crypto: USA is the Problem

The Strait of Hormuz is at the center of a dangerous global chess match. But this time, the impact is not limited to the energy sector. Cryptocurrencies, often considered separate from traditional markets, are starting to show clear signs of vulnerability. 

Behind the unrest is a high-stakes military escalation, triggered by U.S. airstrikes on Iranian nuclear sites, that has forced Iran's parliament to vote in favor of closing the Strait. 

While the final decision rests with Iran’s Supreme National Security Council, the potential economic shock is already echoing across digital asset markets.

The Strait of Hormuz: Why It Matters

The Strait of Hormuz is more than just a narrow waterway, it’s the artery of global oil supply. Around 20% of the world’s seaborne oil and roughly a third of its liquefied natural gas pass through this critical chokepoint every day. 

Located between Iran and Oman, this narrow stretch of sea connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. Any disruption here can send global markets into panic mode.

That panic may be closer than ever. Following a large-scale U.S. military operation on June 22, dubbed Operation Midnight Hammer, which targeted three key Iranian nuclear sites, Iran’s parliament retaliated by voting to close the Hormuz Strait. 

Though the vote is advisory, military figures like Revolutionary Guards Commander Ismail Kowsari have confirmed that the option is now under serious consideration.

Read also: Iran Israel Update: Is the US Joining the War?

Oil Prices Surge, Crypto Shivers

Historically, oil and gas markets are the first to react when the Strait of Hormuz is threatened. In this case, experts predict that oil prices could jump from $70 to as much as $120 per barrel if the closure becomes official. 

Gasoline prices at the pump may surge by $4 to $5 per gallon globally, especially in the U.S. and Asia.

But what about crypto? Though often considered decentralized and independent, crypto markets are not immune to geopolitical shocks. After the strikes on Iran, Bitcoin fell by around 1% over the weekend, while Ethereum dropped more than 5%. 

Data shows that nearly $600 million in long crypto positions were liquidated in 24 hours, a clear indication that traders are reacting to the uncertainty.

Why Crypto Is Affected

According to Coinmarketcap, the crypto market capitalization has fallen by about 1% as of today, June 23, 2025. 

Unlike in past years, today's crypto market is far more integrated with traditional finance. Hedge funds, institutional traders, and global investors now treat Bitcoin and Ethereum as alternative assets. 

When major geopolitical events unfold, like the potential closure of the Hormuz Strait, these investors often rush to reduce risk, which affects crypto prices just as it does stock indices and commodities.

Moreover, higher oil prices feed into inflation, prompting central banks to maintain or even raise interest rates. Since crypto is often seen as a hedge against fiat inflation but suffers when borrowing costs rise, this puts further downward pressure on digital assets.

Read also: Iran vs. Israel Update: How Missiles are Breaking Buildings

The Risk of Escalation

The U.S. airstrikes used high-powered bunker buster bombs, targeting Iran’s nuclear facilities in Isfahan, Fordow, and Natanz. In total, 125 aircraft were deployed. 

President Donald Trump called the operation a success, but military analysts warn the real consequences might come later, possibly at sea.

Iran has long said it could shut down the Strait of Hormuz, whether by laying naval mines or deploying missiles from its coastal bases. The threat is credible. 

Iran has a well-established naval command in Bandar Abbas, and the Strait itself is only about 21 miles wide at its narrowest point. If mining or missile attacks occur, global shipping would grind to a halt, not just oil, but also commodities and electronic goods.

Crypto and Commodities Tied by Uncertainty

In the last two years, crypto has seen increased correlation with commodities during periods of stress. When oil prices soar due to supply disruptions, investor risk appetite drops. This tends to lead to broad selloffs across speculative markets, including digital assets. 

Additionally, if trade routes are disrupted, it can affect mining operations in oil-dependent countries and increase energy costs globally, indirectly impacting Bitcoin mining profitability.

Maritime security firms have also reported a rise in electronic interference near the Strait, affecting navigation systems on commercial ships. 

A recent collision east of Khor Fakkan further spooked operators, though no evidence has confirmed sabotage. Still, these incidents add to a growing list of concerns for investors, who are shifting away from high-risk assets like crypto until tensions ease.

Read also: Iran Israel War Impact on Crypto

What Happens Next?

Iran’s Supreme National Security Council, along with Ayatollah Ali Khamenei, will decide whether to act on the parliamentary vote. Analysts believe this decision could come within days. In the meantime, global markets are bracing for impact, and crypto traders are watching closely.

As long as the threat of closure remains on the table, market volatility will likely continue. The U.S. Navy’s increased presence in the region, including the USS Nimitz carrier strike group, signals that Washington is preparing for possible maritime conflict.

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Frequently Asked Questions (FAQ)

Q: Who owns the Strait of Hormuz?

A: The Strait of Hormuz is bordered by Iran on its northern coast and the Musandam peninsula on its southern coast, which is shared by the United Arab Emirates and Oman. The strait is about 90 nautical miles long and varies in width from 52 to 21 nautical miles.

Q: Where is the Strait of Hormuz?

A: The Strait is located between Oman and Iran. It connects the Middle Eastern Gulf in the north to the Gulf of Oman in the south and the Arabian Sea beyond. At its narrowest point, it is 33 km wide, with shipping lanes just 3 km wide in each direction.

Q: What is the use of the Strait of Hormuz?

A: The Strait of Hormuz connects the Persian Gulf to the Arabian Sea and is known as one of the world's most important oil transit routes. If oil cannot pass through it, even temporarily, global energy prices could rise, shipping costs could increase, and there could be significant supply delays.

Q: What percent age of the world's oil passes through the Strait of Hormuz?

A: Approximately 20% of the world's oil and natural gas shipments pass through the narrow waters of the Strait of Hormuz, located between Iran to the north and Oman to the south.