Coinbase analysts have highlighted the inherent risk to the crypto market ahead of President Donald Trump’s April 6 deadline on the Iran deal. Trump had that before threatened to scale up attacks on Iran’s power plants after bombing one of its bridges.
From a market perspective, David Duong, Coinbase’s global head of investment research, said the impasse could put crypto in a “precarious position.” He added:
The deadline is more about how a prolonged standoff could reprice geopolitical risk premia for energy and risky assets. This means that crypto will once again be in a precarious position next weekend.
In the event of a deal, Duong noted that oil risk could stabilize and “bring risky assets across the board back to macro fundamentals.” However, if the crisis escalates, crude oil supply shocks could increase the likelihood of a global recession.
In a recent one statementTrump had predicted that the war could be over in two to three weeks. If so, Doung estimates a “short-lived volatility.” Meanwhile, however, the analyst said:
We think markets will continue to price a modest geopolitical risk premium in crypto until there is clearer direction on when the conflict could end.
Will oil shocks increase pressure on crypto again?
In March, the oil boom took the year-to-date rally to 78%, while the rest of risk assets, including US stocks and gold, continue to contract. BTC in particular showed initial strength, but momentum dissipated in late March. Notably, this brought the YTD loss to over 25%.
Interestingly, Ethereum fell harder, dropping around 34% and setting the tone for the broader altcoin market, with select tokens printing new lows.
In other words, whichever direction the West Asian crisis takes will have an impact on the price of oil, which would ultimately impact risky assets, including crypto. In fact, broader market sentiment has remained in “extreme fear” during the March war.
Now, some recent investors closed their BTC positions after breaking even. This was illustrated by the profitability metric, the Spent Output Profit Ratio (SOPR), approaching 1, while BTC hovered around $68,000.
The same market fear was also reflected in the options market, where institutional players hedge against risks. According to the options platform Derive, there was an increasing demand for protection against the downside risk at expiration at the end of April.
Overall, the market was tense ahead of Trump’s deadline.
Final summary
- Coinbase warned that Trump’s April 6 deadline could put more pressure on the already fragile crypto market
- The West Asian crisis and the resulting oil boom have put risky assets on edge.