Bitcoin surged to nearly $70,000 as traders reacted to signs of a possible de-escalation of the war in Iran and amid a short squeeze that liquidated more than $270 million in short sales.
Cryptocurrency prices rose, as did stock index futures and stocks, as Axios reported that the United States and Iran were discussing a possible 45-day ceasefire. The report raises hopes that hostilities could ease, potentially reducing risks for ships navigating the Strait of Hormuz.
This improves the appetite for risky assets in the markets, and the US Dollar Index (DXY) has fallen. This pushback is growing as reports suggest that Pakistan is negotiating the so-called “Islamabad Accord.”
Under the terms of the agreement, a ceasefire would take effect immediately and the Strait of Hormuz would be reopened. However, the markets still need to be convinced.
On Polymarket, the chances of a ceasefire this month are around 30%, up from 18% before the Islamabad deal was revealed. Oil prices remain high and the Federal Reserve is still expected to keep interest rates unchanged.
If a ceasefire materializes and the conflict ends, a resumption of relief could further benefit at-risk assets. For now, however, traders appear to be treating the headlines with skepticism.
Positioning of derivative products
- Notional open interest (OI) in bitcoin and ether (ETH) increased by 7% and 11%, respectively, outpacing gains in spot prices. This suggests further capital inflows into the market, likely to drive out bullish exposure, as funding rates and cumulative volume deltas for BTC and ETH remain positive.
- Among altcoins, ADA, AVAX, and LINK stand out with double-digit increases in open interest as well as positive funding rates. In contrast, sentiment appears bearish for BCH and HYPE, which have negative funding rates.
- The collapse in Bitcoin volatility continues, signaling market calm and supporting bullish price action. The 30-day implied volatility index, BVIV, fell below 50% for the first time since early February. The Ether index, EVIV, also fell to its lowest level in weeks.
- On Deribit, the $60,000 Bitcoin put and $80,000 call are the most popular options bets, each boasting a notional open interest of $1.40 billion at press time. These are therefore key levels to watch, as they represent areas where traders are strongly positioned for either downside protection or upside participation.
- Volatility could therefore increase significantly if prices move out of the $60,000 to $80,000 range.
- Generally speaking, the mood in the options market remains cautious despite bullish indications on futures contracts. BTC and ETH puts remain more expensive than calls, a sign of continued demand for downside hedging. Part of the bias toward puts also comes from the persistent crushing of calls, a yield-generating strategy.
Symbolic discussion
- Algorand’s ALGO token has surged nearly 50% in the past 30 days after a Google Quantum AI research paper highlighted its approach to quantum security.
- Google’s report examines how blockchains can defend against future threats from quantum computers, which may be able to break current encryption methods. Algorand has particularly attracted attention for its use of FALCON, a post-quantum signature system selected by the US standards body NIST.
- The network already uses the system for features like proofs of state, which confirms ledger updates, and for certain types of transactions.
- ALGO has risen from around $0.08 to almost $0.12 so far, bringing its market cap to over $1 billion. It rose more than 7.3% in the past 24 hours, amid a broader market recovery.
