bitcoin rose to near $70,000 as traders reacted to signs of a possible de-escalation of the war in Iran and amid a brief squeeze that liquidated more than $270 million in shorts.
Cryptocurrency prices rose, along with stock index futures and stocks, as Axios reported that the United States and Iran are discussing a possible 45-day ceasefire. The report raised hopes that hostilities could ease, which could reduce risks to ships sailing through the Strait of Hormuz.
This is improving appetite for risk assets across markets, and the US Dollar Index (DXY) fell. The withdrawal is being amplified as reports suggest Pakistan is negotiating what is called the “Islamabad Agreement.”
Under the agreement, a ceasefire would take effect immediately and the Strait of Hormuz would reopen. However, markets still need to be convinced.
In Polymarket, the chances of a ceasefire this month are around 30%, down from 18% before the Islamabad Agreement came to light. Oil prices remain elevated and the Federal Reserve is still widely expected to keep interest rates unchanged.
If a ceasefire materializes and the conflict subsides, an aid rally could further benefit risk assets. For now, however, traders appear to be treating the headlines with skepticism.
Derivatives positioning
- Notional open interest (OI) in bitcoin and ether (ETH) has increased by 7% and 11%, respectively, outpacing gains in spot prices. This suggests new capital inflows into the market, likely chasing bullish exposure, as both 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 along with positive funding rates. In contrast, sentiment appears bearish for BCH and HYPE, which have negative funding rates.
- Bitcoin’s volatility decline continues, indicating calm in the market and supporting bullish price action. The 30-day implied volatility index, BVIV, has fallen below 50% for the first time since early February. The Ether index EVIV also fell to the lowest level in weeks.
- On Deribit, the $60,000 bitcoin call option and the $80,000 call option are the most popular betting options, each with a notional open interest of $1.4 billion at the time of this publication. These, therefore, are key levels to watch as they represent areas where traders are strongly positioned for either downside protection or upside participation.
- Therefore, volatility could increase sharply if prices move out of the $60,000 to $80,000 range.
- Overall, the mood in the options market remains cautious despite bullish signs in futures. BTC and ETH put options remain more expensive than call options, a sign of strong shortside covering demand. Part of the put option bias is also due to persistent overwriting of call options, a return-generating strategy.
symbolic talk
- 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-resistant security.
- Google’s report examined how blockchains can defend against future threats from quantum computers, which could break current encryption methods. Algorand attracted attention for its use of FALCON, a post-quantum signature scheme selected by US standards body NIST.
- The network already uses the system for functions such as state testing, which confirms ledger updates, and for certain types of transactions.
- ALGO rose from about $0.08 to about $0.12 so far, bringing its market cap to over $1 billion. It is up more than 7.3% in the last 24 hours amid a broader market rally.
