Oil Drops 7% as US-Iran Pause Hormuz Strikes; BTC, ETH Steady

Crypto steadied on Monday after the U.S. and Iran paused strikes over the Strait of Hormuz, sending Brent crude tumbling more than 7% to around $87 a barrel from above $100 and lifting equities and risk assets broadly. Bitcoin held near $65,200, ether climbed 0.51% to $1,963 and DeFi tokens led the rebound with AAVE up 9%, LDO up 9.4% and ONDO up 7%. PUMP surged 12% to push its market cap toward $800 million from $570 million two weeks ago.

Why it matters

The de-escalation pulled the geopolitical tail risk out of the market just as traders were bracing for a pivotal Fed decision on Wednesday. With oil easing, the probability of a rate hike, the first in three years, dropped to 30.5% from 37.4% on Friday, according to CME Group's FedWatch tool. Inflation is running at 4.1%, much of it driven by the oil shock from the Iran war, so a drop in crude gives the Fed less reason to tighten. The unwinding is visible across asset classes: Nasdaq 100 futures are up 1.36%, the S&P 500 up 0.80%, and gold and silver higher as inflation fears recede.

Market impact

Bitcoin's $65,200 print masks a positive shift: the spot price bounced back above $64,000 over the weekend, triggering $312 million in 24-hour liquidations, mostly of short positions. Bears paid the price for the turnaround. Futures traders are participating less in the bounce, with open interest pulling back to 740K BTC from a Friday spike above 760K, though positive funding rates and CVD suggest a bullish bias. Ether is confirming relative strength, with ETH futures open interest hitting 14.66 million ETH, the highest since June 7, and the most positive OI-adjusted CVD among majors. Bitcoin's 30-day implied volatility sits near 40%, just above a two-month low of 38%, a sign of returning calm heading into the Fed meeting.