The crypto market is starting to price in the possibility of a ceasefire.
The Kobeissi Letter emphasized an important signal. US President Donald Trump recently posted on Truth Social that the US is demanding an “unconditional surrender” from Iran, implying that a ceasefire could be postponed.
Looking at history, a similar statement from the president was followed six days later by a de facto ceasefire. Based on this pattern, analysts now speculate that a ceasefire could take place on March 12 this year.
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However, this is not just a theory. Market data also seemed to support this trend.
Recently, the crypto market saw significant inflows while oil prices rose sharply. In fact, US oil is on track for its biggest weekly gain since 1982, up +34.5% this week alone.
From one economic perspectiveThese rising oil prices create long-term inflationary pressures. Combined with rising war costs, the resulting budget pressures could increase the urgency for a ceasefire.
Until now, risky assets have functioned as a hedge. The bigger question now is: if the ceasefire holds, will crypto lose that hedge status, or could it instead become the catalyst for “much-needed” market momentum?
The uncertainty surrounding the ceasefire is testing crypto’s hedge status
This week was a textbook example of crypto volatility.
After nearly $150 billion flowed into the market in the first half of the week, inflows slowed dramatically. We now close with just $50 billion, meaning 67% of the second half gains have been wiped out.
However, the bigger story lies in the macro context. The early inflows were largely driven by the conflict in the Middle East, which prompted investors to move capital into Bitcoin [BTC]. This particularly strengthened its role as a hedge.
Source: TradingView (XAU/BTC)
Now the momentum has weakened, leaving investors wondering whether BTC can maintain that status or not. Furthermore, the XAU/BTC ratio rose 6% intraday, recouping 50% of the losses it faced earlier this week.
From a rotation perspective, capital may turn away from cryptocurrencies back into old assets. This raises another important question: was BTC’s breakout past $70,000 really a reflection of its appeal to hedge funds, or was it just another fake breakout?
Given the volatility this week, this move feels more like speculation than real momentum. In this context, a ceasefire would be a clear bullish signal for the market, potentially reigniting confidence in crypto as a hedge.
On the other hand, what happens if the ceasefire does not hold and oil prices continue to rise? Capital could further turn into gold, increasing the risk of crypto losing its status making things harder for BTC to get past $70,000.
Final summary
- BTC’s breakout past $70,000 was driven by conflict-driven demand, but weak momentum threatens its hedge status.
- A successful ceasefire could stabilize markets, while a failed ceasefire and rising oil prices could push capital into old assets.