Crypto markets are stuck in a holding pattern as geopolitical tensions in the Middle East cloud an otherwise improving macro backdrop, according to crypto asset manager Grayscale.
“The war in Iran overshadowed virtually all other market developments in March,” Grayscale’s research team said in a Wednesday report.
Before the conflict escalated, global growth appeared to be strengthening and central banks were leaning toward rate cuts. That outlook has been altered by a sharp rise in oil prices, which has fueled concerns about inflation and raised interest rate expectations, weighing on risky assets and keeping investors on the sidelines, according to the report.
Since the outbreak of the Middle East conflict, crypto markets have been volatile but largely limited, with strong headline-driven swings linked to oil prices and shifts in risk sentiment. bitcoin It initially fell to around $60,000 on the first rally, then rebounded towards the low $70,000s before falling again as the conflict dragged on and macroeconomic conditions tightened.
More recently, a fresh rally has seen bitcoin fall roughly 10% from March highs, along with declines in ether (ETH) and other tokens, as investors retreated from risk assets. Despite the turbulence, performance has held up better than some traditional markets, with bitcoin virtually stable since the start of the war and even outperforming stocks at times, underscoring both its sensitivity to macroeconomic shocks and its relative resilience.
For now, Grayscale expects many market participants to wait for greater clarity. If the conflict subsides and energy prices decline, markets could quickly adjust their prices toward a more favorable macroeconomic environment. Otherwise, persistently high oil prices could continue to pressure growth and delay a broader recovery.
Still, cryptocurrencies have shown remarkable resilience. Prices have remained relatively stable through the volatility, suggesting a more durable bottom may be forming. The research team also pointed to continued inflows into spot cryptocurrency investment products and a rally in futures positioning as signs that risk appetite is stabilizing beneath the surface.
Looking ahead, the report argues that the key catalyst for a sustained recovery will be a reduction in macroeconomic uncertainty. But he maintains that the long-term drivers of the asset class, including the growing adoption of stablecoins and tokenized assets, remain intact.
The stablecoin market has expanded rapidly in recent years, with total supply increasing from around $20 billion in 2020 to more than $300 billion in 2025, reaching around $315 billion, according to industry data.
The sector added approximately $100 billion in 2025 alone, reflecting renewed growth after a brief contraction, as demand for dollar-pegged digital assets surged across on-chain commerce, payments and finance.
Periods of heightened uncertainty like the current one have historically presented attractive opportunities for long-term investors positioning themselves for the next phase of growth, the report added.
Read more: Bitcoin Holds Steady as Gold, Silver Fall on ETF Outflows, Liquidity Strains: JPMorgan
