By Suvashree Ghosh

(Bloomberg) -- Bitcoin started the week on a volatile note as growing expectations of a prolonged war in Iran sent oil prices surging and rocked global markets.

The original cryptocurrency briefly surpassed $68,000 in early European trading, remaining up about 0.5% at 6:30 a.m. in London. It reversed losses from hours earlier, when spiking oil prices sent the token down as much as 2.4% to $65,633, its lowest price in a week. Brent crude rose as much as 29% to $119.50 a barrel, the biggest intraday move since April 2020, spurring a selloff across stocks, bonds and most currencies.

Most Read from Bloomberg

• US Tells Tariff Refund Judge It Can’t Comply With Order

• US Considers Idea of Special Operation to Seize Iran’s Uranium

Asian shares slumped, with South Korea’s Kospi index falling as much as 8.8%. The dollar, the haven of choice amid inflationary pressure, rose against nearly all its peers. Treasuries also sold off, with benchmark US 10-year yields hitting a one-month high.

Bitcoin’s outperformance compared with other risk assets shows that “there are very little leveraged long positions left,” said Damien Loh, chief investment officer at Ericsenz Capital. He added that a minor pullback in oil later in the day contributed to Bitcoin short sellers closing out their positions.

Still, the mood remains bearish on concerns over elevated energy costs, which are expected to fuel inflation.

“The geopolitical situation in the Middle East has moved beyond a single military event into sustained economic disruption,” said Hayden Hughes, managing partner at Tokenize Capital. He added that investors are bracing for the latest US consumer price index numbers, scheduled for release this week.

Caution was evident among institutional investors pulling money from exchange-traded funds, with flows turning negative again at the end of last week. US-listed spot Bitcoin ETFs have seen nearly $6 billion in net outflows since November, according to data compiled by Bloomberg.

Hughes said $64,000 is the immediate downside level to watch for Bitcoin, while a break below that would bring the next support level to $61,000. On the upside, $68,000 is the next resistance level, he added.

Most Read from Bloomberg Businessweek

• Elon Musk Is Backing ‘JD Vance 2.0.’ Some Republicans Aren’t Sure That’s a Good Thing

• How Data Centers Became a Casualty of War

• ChatGPT Backlash Reveals New Pitfalls in Aligning With Trump

• Calvin Klein Is Missing Its Carolyn Bessette Kennedy Moment