Oil prices rose 10%, putting pressure on Bitcoin after President Donald Trump’s mixed signals on the West Asian crisis.
Trump said the war could end in the next “two to three weeks,” but… added,
We are going to take them (Iran) back to the Stone Age, where they belong. In the meantime, discussions are ongoing… We have all the assets; they don’t have one.
This was opposite to some expectations, as some quarters hoped for an announcement of the end of the war.
Following the comments, oil prices rose from $97 to $108, indicating traders expected further escalations.
But performance across markets was mixed. On April 1, the US stock market closed higher, but BTC stuck at $69K. It extended losses to $66,000 on April 2, down 4%.
What’s next for BTC?
Most of BTC’s pullback occurred on Thursday before the US market opened. This meant that risk sentiment could deteriorate further, especially if US ground forces invade Iran as speculated.
Prediction site Polymarket even estimated a 62% chance of a US ground invasion in April.
If such an outcome puts the energy market in further trouble, inflation fears could rise again. For BTC and crypto, however, the potential impact remains unclear given its past correlation with oil.
During the West Asian crisis in March, BTC posted mixed performance. Sometimes the price rose along with oil, as in the first half of March. However, in late March, the rise in oil prices caused BTC to fall lower.
Plus, US tax season is here and ends on April 15. Typically, this period reduces dollar liquidity, keeping BTC temporarily under pressure before a potential rebound in the second half of April.
The market’s caution remains
Interestingly, the options market, where experienced traders and institutional investors hedge their bets, also reinforced caution.
This was illustrated by a key metric, 25-Delta Risk Reversal (25RR), which turned negative for all option expirations in April. Simply put, this meant that there was more demand for puts (hedging against downside risk) than for calls (bullish bets).
Commenting on the market positioning, Bitfinex analysts say said there was a ‘meager conviction’, adding that,
This overarching compression suggests that the market is waiting for a major catalyst that will drive a targeted repricing of risks.
At the time of writing, BTC was trading at $66.2K and still within the $60K-$70K price range amid rising prices. busy selling.
Final summary
- BTC fell 4% to $66,000 after Trump’s mixed messages on the Iran war.
- The options market was cautious: Polymarket estimated a 62% chance that US ground troops would invade Iran.