Iran, through intermediaries from Pakistan, has delivered a response to the U.S. ceasefire proposal. The exact contents of the document have not been officially disclosed, but markets began to fluctuate again after this development.
According to The Guardian, Washington tried to use the talks as a way to reduce tensions around the Strait of Hormuz and at the same time bring Iran back to discussions on the nuclear deal.
The Market Hits the Fed Rates Again
Investors are now watching not only the Middle East, but also how this entire situation could impact oil and inflation in the U.S.. If oil starts to rise rapidly again, the Fed is unlikely to rush to cut rates. And markets generally dislike expensive money—especially crypto and tech stocks.
Andrew Slimmon from Morgan Stanley Investment Management believes the situation could quickly change if tensions around Iran begin to ease.
“If this happens in the next couple of weeks, rate cuts could start by the end of the year,” he told Business Insider.
At the same time, many in the market still believe that rates in the U.S. will remain high longer than expected. The American economy still feels too strong for the Fed to make a sharp policy shift.
Because of this, bitcoin is increasingly reacting to macroeconomic factors. Now, news about oil, rates, or inflation affects crypto almost as much as events within the crypto market itself.
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During the banking crisis in the U.S. in 2023, BTC rose by more than 35% in a month because the market expected the Fed to ease policy. But in 2022, it was the opposite: bitcoin crashed by more than 60% amid inflation and constant rate hikes.
Analysts at Kaiko note that during periods of serious turbulence, bitcoin is increasingly moving almost in sync with the Nasdaq.
Tensions in the Middle East Remain High
According to The Guardian, air defense systems in the UAE and Kuwait intercepted drones that entered the countries’ airspace.
Off the coast of Qatar, a vessel caught fire after a drone attack. Another attack occurred near Erbil in northern Iraq. The target was a camp of an Iranian Kurdish group.
This happened shortly after the U.S. ended Project Freedom operations. The idea was to escort commercial vessels in the Persian Gulf after a series of attacks near the Strait of Hormuz.
But after new strikes on American targets and oil infrastructure in the UAE, this plan was abandoned.
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At the same time, Iranian military officials warned that countries supporting sanctions against Tehran could face problems passing through the Strait of Hormuz.
Debate Over Iran’s Nuclear Program Intensifies Again
Netanyahu continues to say that it is too soon to consider the conflict over. The main reason is the stockpile of highly enriched uranium that Iran still possesses.
According to IAEA, Tehran currently has about 440 kilograms of uranium enriched up to 60%. Trump, meanwhile, is noticeably calmer. In an interview with Full Measure, he said the U.S. continues to monitor the situation closely.
“If anyone approaches the facility, we will know immediately and strike,” Trump said.
Because of the difference in positions between the U.S. and Israel, negotiations around Iran could become even more complicated.
Why the Crypto Market Is Watching This
For crypto, everything now comes down to liquidity. If oil stabilizes and inflationary pressure starts to ease, the Fed will have more room to cut rates. And that usually helps risk assets grow.
On-chain data shows that during periods of nervousness, some traders move into stablecoins. When the situation calms down, money gradually flows back into BTC and altcoins.
A visit by Donald Trump to China is also expected. Beijing, meanwhile, continues to advocate for reducing tensions around the Strait of Hormuz.
How negotiations between the U.S. and Iran proceed could significantly affect oil, the stock market, and crypto in the coming months.
