Bitcoin (BTC) is still below 70,000 USD on Tuesday. Traders are contemplating various signals from Trump's hard Iran ultimatum and reports of positive ceasefire talks.
President Trump has set a deadline at 8:00 PM ET for Iran to open the Strait of Hormuz. This has made Tuesday a crucial day for risk assets.
War signals pull BTC in both directions
Vice President JD Vance said on Tuesday that the war will soon come to an end and that military objectives have been achieved.
At the same time, a senior American official told Fox News that Washington has direct contact with Tehran. The official described the talks as 'positive' and believes in a breakthrough before the end of the day.
But Trump wrote in a completely different tone on Truth Social. He warned that “a whole civilization will die tonight” and claimed that “total regime change” has occurred.
“A whole civilization will die tonight and never come back. I don’t want that, but it is likely to happen… We will find out tonight, one of the most important moments in the world’s long and complicated history,” said Trump.
Trump's post mentioned that it has been 47 years since Iran's Islamic Revolution in 1979.
Anthony Scaramucci, former White House communications director, called the statement a veiled threat of a nuclear attack.
Skeptics against hawks provide two possible outcomes
Not everyone believes Trump’s words to the letter. Macro commentator Rational Aussie argued that the rhetoric shows Trump’s weak negotiating position, not a real willingness for war.
He thought that Trump would extend the deadline overnight and that the markets would then rise. Many traders call this pattern “TACO Tuesday,” which means “Trump always backs down.”
“Trump will back down… his rhetoric becomes more extreme when things go badly for him – then he negotiates. He wants everyone to believe he is irrational… He is trying to create leverage by creating what is most rare: fear of consequences. I completely believe that I will wake up in 8 hours to a headline like ‘we were so close to giving the order’,” he wrote.
At the same time, Iran is not backing down quietly. A high Iranian source said that if the situation worsens, Tehran’s allies will close the Bab el-Mandeb strait.
This narrow strait in the Red Sea is important for ships to Europe and is already sensitive to disruptions from the Houthis.
The closure of the Strait of Hormuz has already removed about 20% of the world's oil supply and raised Brent oil to over 110 USD per barrel.
If Bab el-Mandeb is also closed, the shock will be greater for energy, fertilizer, and shipping prices.
Bitcoin opened Tuesday at 68,860 USD, a decrease of 0.2% from Monday. The price briefly fell to 68,200 USD before rising again and was at 68,392 USD when this was written.
The fear and greed index remains at an extremely fearful level, where it has been for over a month.
If the deadline passes without the conflict escalating, the “TACO” theory holds and a market recovery becomes likely.
If attacks on civilian targets occur, continued selling and liquidation could force BTC down towards 66,000 USD, where support was tested last week.
The traders have a few hours left to see which scenario will become reality tonight.