The Iran Peace Deal Factor

On May 7, bitcoin reversed course, dipping below $80,000 to effectively erase gains made since Monday. As shown by the daily chart, the top cryptocurrency—which reached a multi-month high of $82,833 some 24 hours earlier—had been under pressure from bears since Wednesday afternoon.

After losing $1,000 during a slow descent from midday to midnight, bitcoin found temporary support at $80,700. While a pre-dawn rally lifted the price to $81,600, the momentum proved unsustainable. The subsequent sell-off was more aggressive, forcing the asset down to a $79,500 intraday low. As of 1 p.m. EDT, bitcoin has reclaimed some ground, currently hovering just below the $80,000 mark.

Bitcoin’s nearly 2% drop dragged its market capitalization below the $1.6 trillion mark, a marked decline from the approximately $1.66 trillion intraday peak reached on Wednesday. The drop helped pull the crypto economy’s market cap to $2.74 trillion, down from just over $2.8 trillion.

The cryptocurrency market’s retreat, which mirrored Wall Street’s, coincided with reports that Iran had rejected the Trump administration’s proposal to end the war. According to a post on X by Walter Bloomberg, a senior Iranian official, Mohsen Rezaei, said Tehran rejected the proposal—which calls on Iran to reopen the Strait of Hormuz—because it does not include reparations for war damage.

Iran’s rejection of the U.S. proposal neutralized the optimism sparked by earlier Axios reports that a deal was imminent. Concerns are mounting that a prolonged diplomatic stalemate will embolden Washington hawks, potentially sidelining proponents of diplomacy and nudging President Trump toward a direct military confrontation.

Despite the plunge, bitcoin was at the time of writing still up nearly 5% since the beginning of the month and more than 15% over a 30-day period. Meanwhile, bitcoin’s volatility over the 24-hour period saw $91 million in overleveraged long positions wiped out, compared with $12 million in shorts. Overall, the crypto economy saw nearly $270 million in long bets liquidated versus $90 million in shorts.

Speaking at CoinDesk’s Consensus Miami 2026, Burt said the country plans to do another airdrop of USDC stablecoin this year and to onboard merchants that can accept digital payments, CoinDesk reported Wednesday.

Bermuda announced its “on-chain economy” initiative in January and aims to build a payment infrastructure that will provide an alternative for small businesses that face high transaction fees on traditional card networks and banking rails as well as limited access to financial apps, according to the report.

Burt said Wednesday that even before the launch of this initiative, Bermuda was building a digital asset framework through its Digital Asset Business Act, and the Bermuda Monetary Authority was working with firms on issues related to digital assets.

“You cannot regulate out failure,” Burt said, per the report. “But you can put in place the items which allow responsible innovation to happen.”

In a Tuesday (May 5) press release issued by the government of Bermuda, announcing that Burt would participate in Consensus 2026, the government said Bermuda aims to be the leading jurisdiction for regulated digital assets and financial innovation.

Burt said in the release that Bermuda’s participation in the event “underscores our commitment to building the world’s first fully on-chain national economy.”

“Since announcing this initiative at Davos in January, we have been working closely with leading digital asset companies, including Circle and Coinbase, to help us execute this vision,” Burt said.

When Burt, Circle and Coinbase announced the initiative in a January press release, they said it would build on an existing partnership in which the government of Bermuda and the two companies helped Bermudian businesses begin accepting digital payments and financial institutions expand their use of stablecoins and tokenized finance.

They said that under the initiative launched in January, the government and the two digital finance companies will help government agencies begin piloting stablecoin-based payments, financial institutions integrate tokenization tools, and residents increase their digital literacy.

Bermuda announced in 2019 that it had begun accepting U.S. dollar-backed digital currencies for the payment of government taxes, fees and services.

Key Takeaways:

• Babylon and Gomining announced a Trustless Bitcoin Vault (TBV) integration for up to 1,000 BTC.
• BTC holders earn Gomining mining rewards via Babylon’s vaults without bridging, wrapping, or custody loss.
• Babylon holds 56,853 BTC in staking vaults and raised $15M from a16z crypto in January 2026.

How the Integration Works

Bitcoin owners will be able to lock their BTC into Babylon’s Trustless Bitcoin Vaults (TBV), a mechanism that holds bitcoin on its native blockchain under programmatic rules, without moving it off the Bitcoin network. From there, users can programmatically borrow and self-commit those locked funds to Gomining’s mining products, earning rewards from Gomining’s industrial-scale operations in the form of native bitcoin yield.

The key distinction, per the official announcement, is that users never wrap their BTC into a synthetic token, never bridge it to another chain, and never hand custody to a third party. The bitcoin remains onchain on the network throughout, with vault rules enforced at the protocol level rather than by a centralized operator.

David Tse, co-founder of Babylon, said the integration “extends the reach and adoption of TBV within a Bitcoin-aligned ecosystem,” while Mark Zalan, CEO of Gomining, added that the partnership “extends infrastructure to Bitcoin holders who refuse to compromise on self-custody.”

The initial rollout targets up to 1,000 BTC, approximately $82 million at current prices, committed through the aforementioned vault system.

Why It Matters for Bitcoin DeFi

The persistent challenge in Bitcoin decentralized finance ( DeFi) has been generating yield on BTC without compromising the properties that make it valuable, i.e. self-custody, onchain transparency, and censorship resistance. Wrapped bitcoin solutions, such as WBTC, require trusting a centralized custodian, and cross-chain bridges have repeatedly proven to be attack vectors, accounting for billions in losses across the broader crypto industry.

Babylon has been building around this constraint since its founding. Its staking protocol already holds 56,853 BTC in staking vaults, approximately $5.64 billion at current prices, making it the largest Bitcoin staking protocol by total value locked. The firm raised $15 million from a16z crypto in January 2026 to develop Bitcoin collateral infrastructure.