Bitcoin (BTC) jumped from a Monday low near $65,000 to briefly trade above $69,200 as of April 1, after a social media post from former President Donald Trump suggested a pause in hostilities with Iran. The broad-based crypto rally also saw Ethereum (ETH) climb more than 3 percent to trade above $2,100.
"The near-term trajectory will likely remain tied to macro developments," said Joel Kruger, a market strategist at LMAX Group. He noted that a clearer path toward de-escalation could push risk assets higher, while continued uncertainty may leave them stuck in a choppy range.
The relief rally came after a brutal prior week that saw Bitcoin fall 5.1 percent and the Crypto Fear & Greed Index sink to a score of 8, a level indicating “Extreme Fear.” While Bitcoin gained, spot Bitcoin ETFs recorded net outflows of $296 million for the week ending Friday, breaking a four-week inflow streak, according to data from ZebPay. The market’s mixed signals highlight the fragile nature of the recovery, with traders now watching a massive $17 billion crypto options expiry set for the end of the week.
The core issue for investors is whether Bitcoin will act as a safe-haven asset or trade like other risk assets, which typically fall during geopolitical uncertainty. Historical precedent from the 2022 Russia-Ukraine conflict shows Bitcoin tends to drop sharply in the initial shock. The key driver is not the war itself, but its impact on inflation, bond yields, and liquidity. A prolonged conflict that keeps oil prices elevated and forces central banks to delay rate cuts creates a difficult environment for crypto.
A Market Braced for Volatility
The bounce on Monday was sharp but lacked immediate follow-through, with Bitcoin slipping back below $69,000 on Thursday as hopes for a lasting peace faded and oil prices rebounded. The move highlighted the market's sensitivity to geopolitical headlines. Ethereum’s 4.4 percent gain to over $2,070 during the initial rally was a standout, signaling some renewed appetite for risk further out on the curve, but it also retraced some of those gains.
The market remains on edge, caught between bullish institutional signals like Morgan Stanley’s planned spot Bitcoin ETF and bearish macro pressures. The U.S. 10-year Treasury yield has climbed back toward 4.43 percent, tightening financial conditions. This dynamic was reflected in the broader equity markets, with the tech-heavy Nasdaq falling 2.4 percent during the same period crypto saw its brief recovery.
Liquidity Remains the Key Driver
While geopolitical headlines can trigger sharp, short-term moves, analysts argue the more significant factor for Bitcoin's medium-term trend is global liquidity. The primary transmission mechanism from a conflict in the Middle East to crypto prices runs through oil prices and bond yields.
If the conflict leads to sustained higher energy prices, it could keep inflation elevated, forcing the Federal Reserve to maintain a hawkish stance and delaying potential rate cuts. This tightens liquidity, which is historically a headwind for speculative assets like Bitcoin. For now, the market is reacting to each headline, but the upcoming $17 billion options expiry on March 27 is expected to be a major source of volatility, potentially setting the trend for the next quarter.
This article is for informational purposes only and does not constitute investment advice.
