Live markets: Iran returns to the headlines, hitting markets

An attempt at an afternoon rally was cut short minutes ago as the interim peace deal in Iran appears to be teetering.

Following the attack of three ships — reportedly by Iran — in the Strait of Hormuz, the U.S. Treasury has revoked a waiver put in place in June that allowed the sale of Iranian oil.

The price of WTI crude oil has spiked more than 5% to $72.11 per barrel and U.S. Treasury yields have jumped higher.

U.S. stocks, which had been attempting to rally in afternoon trading, sank back near session lows, the Nasdaq down 1.3%.

Bitcoin has slipped to $63,600 from $64,100.

The Nasdaq has narrowed what was more than a 1.5% decline to just 0.5% about 90 minutes before the close.

The AI trade remains sharply lower, but gains for the hyperscalers are helping the overall average. Microsoft, Amazon, Google, and Meta are all higher by 1%-2%.

Bitcoin is trading in a tight range around the $64,000 level.

The Nasdaq is lower by "just" 1.5% in morning U.S. trade Tuesday, but that's masking far steeper declines in AI infrastructure favorites.

Read more: AI trade loses steam as infrastructure boom faces reality check

Micron, Intel, AMD, Applied Materials, SanDisk and KLA Corp. are among the names that are lower by 9%-12%.

That, in turn, is pressuring crypto prices, with bitcoin dipping to $62,900 after having risen above $64,000 overnight. Bitcoin, however, is still higher by 1.2% over the past 24 hours.

Ether is higher by 1% over the last day, while XRP has turned negative by 1% over that time frame.

The spectacular gains in AI are conventionally thought to have drawn investor attention and capital away from crypto in recent months. To the extent that it reverses for an extended period of time, might some of that money return to crypto?

BlackRock-backed tokenization platform Securitize (SECZ) is down another 10% Tuesday, extending losses to roughly 30% since completing its merger with special purpose acquisition company Cantor Equity Partners II last week.

The decline adds to a broader pullback across newly public digital asset companies.

For example, crypto custodian BitGo (BTGO) has fallen more than 70% since its February IPO.

With the 25-day quiet period following the IPO having concluded, Wall Street on Tuesday is launching coverage on SpaceX (SPCX). To no one's surprise, the sell-side is overwhelmingly bullish.

The two lead underwriters — Goldman Sachs and Morgan Stanley — both gave SpaceX buy-equivalent ratings, though Goldman's Eric Sheridan set just a $205 price target, while Morgan Stanley's Adam Jonas gave the stock a $300 target.

SPCX shares are flat premarket at $160, remaining nicely higher than the $135 IPO price.

Other buys, or buy-equivalent ratings, are coming from Bank of America, Citigroup, Deutsche, JPMorgan, Macquarie, RBC, UBS, and Wells Fargo.

The highest price target so far appears to be $800 from Raymond James' Brian Gesuale, who initiated with a strong buy rating.

"We see the company as one of the defining industrial infrastructure companies of the 21st century," wrote Gesuale and team.

Activity in HYPE options listed on decentralized exchange Derive has picked up this week, with some traders betting on boring price action below $70 over the next couple of weeks.

A sizeable long call condor involving 400,000 contracts has stood out in the options tape. The structure buys the 70 call, sells the 75 and 80 calls, and buys the 85 call, all in the July 24 expiry, according to data source Laevitas.

The setup delivers maximum profit if HYPE finishes between $75 and $80 at expiry on July 24. It points to traders expecting the price to stay calm and range-bound in that zone over the coming weeks.

U.S. spot bitcoin ETFs pulled in $265.69 million on Monday, the largest daily inflow in over a month and the second in three sessions after July 2 broke a long run of outflows, per SoSoValue data. Ether ETFs added $20.66 million the same day, led by BlackRock's ETHA at $23.29 million.

BlackRock's IBIT absorbed $209.40 million of the bitcoin total, with ARKB taking in $32.98 million and Grayscale's mini BTC fund adding $42.25 million. GBTC shed $44.45 million, the only fund in the red.

The daily turn has not fixed the weekly picture yet. Spot bitcoin ETFs still lost a net $526.6 million over the shortened holiday week, an eighth straight week of negative flows. Ether ETFs lost $13.7 million on the week.

Total bitcoin ETF assets climbed back to $77.32 billion from a June 30 low of $70.95 billion, helped by both the price recovery and the returning bid. Bitcoin traded near $63,200 as the data landed, per CoinDesk data.