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Key Takeaways
Crypto markets move higher this week, as talks of a temporary ceasefire between the US and Iran materialise in the Middle East. As well removed restrictions on movement through the Strait of Hormuz.
As the week has progressed, tensions flared in neighbouring regions, potentially adding further uncertainty to the geopolitical situation.
Chart of the week:
This big news this week has been the ceasefire between the US and Iran. Geopolitical tensions have been the leading news story for most of April, with conflict in the Middle East casting a net of uncertainty across the world. This has potentially been a catalyst for risk-on markets like crypto and equities struggling over the past few weeks.
However, hopes for clarity may be starting to materialise. Since it was reported there would be a two-week ceasefire from April 7th between the US and Iran, crypto’s total market cap (according to TradingView) has seen a 7.7% rise.
Bitcoin has reclaimed ground, back above $70,000 US, while Ethereum (US$2,500,) Solana (US$85) and XRP (US$1.38) all rebounded following weeks of negative price action.
We also saw the S&P500 regaining 2.6% in a single day following the news release, putting the equity index back to just shy of its 2026 yearly opening price, US$6,878. I bring this up because it demonstrates that this rebound wasn’t just a silo move in crypto. This was news the entire market, as evidenced by price movements, was happy to hear.
But as we look toward the weekend, let’s take a minute to digest how the market structure has shifted and the potential scenarios that could play out from here.
Let’s dig in.
Unknowns
Based on the events of the week, we can start with a simple assumption: the market cares about tensions easing between the US and Iran. If this assumption continues to prove true, then the Strait of Hormuz returning to something like normal operation matters as well.
Both developments support the idea that broader market conditions – pending conflict resolution – could be moving back to a more stable environment. But the inverse is just as important. If either of those two pillars start to wobble, then so can the positioning built on them this week.
What I’m trying to get across is that if traders have been buying on the back of ceasefire optimism and improved access through key trade routes, then any renewed flare-up could quickly bring selling back into the market.
That is the unfortunate reality here. Over the last year or two, we’ve seen how quickly geopolitical surprises can disrupt what the market expects, and markets are there to digest information and decide if an investment makes sense in the evolving climate.
This is a lens on how to view what the market does next over the coming days and weeks.
Knowns
Now while we don’t know how the above will pan out, there are still some dates ahead that might provide insight market confidence in risk-on assets like crypto. There are some macro data prints that could add a flavour of short-term volatility ahead.
At 10:30pm AEST on Friday the 10th of April we will get the latest rounds of inflation data from the US. Inflation has been another key metric to follow in recent times, as the market looks to understand how rate cuts or rate rises might be lined up for 2026. There has been a mixture of results, but the general trend is down. A year ago the year on year inflation for consumer inflation (CPI) was 3.5% and last month’s reading was 2.4%.
While we don’t know how the market will process this, what we do know is that the market will get the latest inflation data in the coming days. If everything lands as expected, it may give the market a little bit more rope to be confident in this week’s uptrend.
Chart of the week: Bitcoin Percent Unrealised Profits
The chart below gives us a useful look at how investors are positioned, using on-chain data, following this week’s move to the upside. As Bitcoin has moved higher, a greater share of supply has shifted back into unrealised profit.
That could help stabilise sentiment, but it also means the market may become more reactive if the backdrop worsens and traders choose to lock in gains rather than keep holding.
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While we’re at it, we can see that historical bear market bottoms have occurred after a larger drawdown of unrealised profit. A key characteristic has also been that each cycle bottom has resulted in a lower peak percent of pain. Historical data isn’t predictive of what is to come, but we can also see that the dip in unrealised profits – from investors taking paper gains, or the market falling – could still have further to go.
This is all to say that shifting sentiment has helped the market’s current rebound, but there could still be more downside to come in a bear market scenario.
See you next time.