US-Iran Agreement Eased Markets, Why Did the Cryptocurrency Market Remain Cautious?

The preliminary agreement announced over the weekend between the US and Iran has boosted risk appetite in global markets, but the cryptocurrency market has not seen a similarly strong sense of relief. In particular, expectations of a possible reopening of the Strait of Hormuz led to rapid price fluctuations in energy markets. While oil prices experienced a sharp decline, a more optimistic atmosphere emerged in Asian and US stock markets.

From a global markets perspective, this development means that one of the biggest uncertainties regarding energy supply has been reduced. The decline in oil prices has strengthened expectations that inflationary pressures may ease and central banks may have more room to act. Therefore, stocks, especially those in sectors sensitive to energy costs and Asian markets, reacted more quickly to the news of the agreement.

Cryptocurrencies Cautious

However, the picture in the cryptocurrency market remained more measured. Although Bitcoin attempted a recovery over the weekend, it failed to maintain its strength above the $66,000 region. Ethereum similarly recorded limited gains, while some altcoins with smaller market cap saw relatively stronger movements. This indicates that investors did not directly translate geopolitical optimism into a large buying wave in the crypto market.

There are several reasons why the market remains cautious. First, the agreement is not yet fully implementable, and the details are unclear, keeping investors in a wait-and-see mode. The fact that previous ceasefires and reconciliation announcements from the Middle East quickly fell apart has led the market to approach such developments with greater caution.

Secondly, strong internal catalysts to support an uptrend in the cryptocurrency market are currently limited. Without spot ETF inflows, institutional purchases, stablecoin liquidity, and a significant revival in on-chain activity, it seems unlikely that news of geopolitical easing alone will initiate a strong and lasting trend in Bitcoin.

Derivative markets are giving a similar message. Although there is an increase in open positions, the fact that funding rates remain low indicates that investors are not using aggressive leverage. In the options market, the change in the put/call balance reveals that some investors are still seeking protection against downside risks. However, the low implied volatility suggests that there is no panic in the market.

In conclusion, while expectations of a US-Iran agreement created significant relief in traditional markets, it had a more limited impact on the cryptocurrency market. A sustained rise in Bitcoin and altcoins may require more than just a decrease in geopolitical tensions. Investors will closely monitor whether the agreement is implemented, whether the decline in oil prices continues, expectations regarding the Fed, and liquidity inflows specific to the crypto market.

Continue Reading: US-Iran Agreement Eased Markets, Why Did the Cryptocurrency Market Remain Cautious?