As financial markets anticipate a potential agreement between the United States and Iran to end the latest round of geopolitical conflict, risk assets such as cryptocurrencies and stocks have generally strengthened. Bitcoin (BTC), often dubbed the “barometer of risk assets,” rose to its highest level in four weeks. Bitcoin briefly climbed to $74,901, its highest since March 17, before slightly paring gains.
Earlier, U.S. President Donald Trump claimed that Iran had made contact with the U.S. regarding potential peace talks, even as the U.S. military began implementing further naval blockades in the Strait of Hormuz. Asian stocks rose sharply on market optimism that the U.S. and Iran could reach an agreement soon, a move believed to help ease oil prices, restore central bank rate-cutting pathways, and boost global economic growth. Damien Loh, Chief Investment Officer at Ericsenz Capital, stated that Bitcoin is following the broader rebound in risk assets, with the market viewing the blockade as a positive signal, suggesting that Trump has effectively extended the timeline for reaching a deal. He added that Bitcoin is outperforming broader risk assets but may not see significant further gains until the U.S. Congress passes the Clarity Act.
Since plunging from its all-time high of $126,000 last October, Bitcoin has traded in a narrow range over the past two months. Since the outbreak of war between the U.S. and Iran at the end of February, Bitcoin has outperformed traditional risk assets such as stocks and high-yield corporate bonds: Bitcoin has risen more than 10% since February 27, gold has fallen nearly 10%, and the S&P 500 has remained roughly flat. IG Markets analyst Tony Sycamore noted that Bitcoin behaves more like a classic risk asset than a traditional safe haven, and for a more bullish medium-term outlook, it needs to sustainably break and close above $79,000.
The first driver behind Tuesday’s Bitcoin rebound was an improvement in macro risk appetite, with markets betting that the conflict at least leaves room for continued negotiations. The second driver was the drop in oil prices, which alleviated concerns about a “reflation plus damaged economic growth” double blow, with Brent and WTI notably falling back below $100, providing a tailwind for high-beta risk assets. The third driver was Bitcoin’s own relative strength, making it more likely to be prioritized for capital replenishment when risk appetite improves. The market now treats Bitcoin as a high-beta tool for expressing risk appetite, so as soon as hopes for negotiations rise, Bitcoin naturally rebounds first. In the medium term, the market continues to watch progress on the Clarity Act and whether the technical resistance level at $79,000 can be effectively broken.
