Bitcoin climbed to near $70,000 as traders reacted to signs of possible de-escalation in the Iran war and amid a short squeeze that liquidated more than $270 million in shorts.
Crypto prices rose along with stock index futures and stocks as Axios reported that the US and Iran are discussing a potential 45-day ceasefire. The report raised hopes that hostilities could ease, potentially reducing the risk to ships sailing through the Strait of Hormuz.
That is improving appetite for risk assets across markets, and the US Dollar Index (DXY) fell. The retreat is compounded as reports suggest Pakistan is brokering what is being called the “Islamabad deal.”
Under the agreement, a cease-fire would take effect immediately and the Strait of Hormuz would be reopened. Nevertheless, the markets still need to be convinced.
On Polymarket, the odds of a ceasefire this month are around 30%, up from 18% before the Islamabad deal emerged. Oil prices remain high and the Federal Reserve is still expected to keep interest rates unchanged.
If a ceasefire materializes and the conflict ends, an emergency meeting could further benefit risk assets. For now, however, traders appear to be treating the headlines with skepticism.
Derivative positioning
- Nominal open interest (OI) in bitcoin and ether (ETH) are up 7% and 11% respectively, outpacing spot price gains. This suggests new capital inflows into the market likely chasing bullish exposure as both funding rates and cumulative volume deltas for BTC and ETH remain positive.
- Among altcoins, ADA, AVAX and LINK stand out with double-digit increases in open interest along with positive funding rates. In contrast, sentiment appears to be bearish for BCH and HYPE, which have negative funding rates.
- Bitcoin’s volatility meltdown continues, signaling market calm and supporting bullish price action. The 30-day implied volatility index, BVIV, has fallen below 50% for the first time since early February. Ether’s index, EVIV, also fell to its lowest level in weeks.
- On Deribit, bitcoin’s $60,000 put and $80,000 call are the most popular options, each boasting a theoretical open interest of $1.40 billion at press time. These are therefore key levels to watch as they represent areas where traders are strongly positioned for either downside protection or upside participation.
- Volatility can therefore increase sharply if prices move outside the $60,000-$80,000 range.
- Broadly speaking, sentiment in the options market remains cautious despite bullish hints in futures. BTC and ETH puts remain more expensive than calls, a sign of sticky demand for downside protection. Some of the bias for puts also stems from persistent overwriting of calls, a return-generating strategy.
Token Talk
- Algorand’s ALGO token is up nearly 50% in the past 30 days after a Google Quantum AI research paper highlighted its approach to quantum-resistant security.
- The Google report examined how blockchains can defend against future threats from quantum computers, which could potentially break current encryption methods. Algorand attracted notable attention for its use of FALCON, a post-quantum signature scheme selected by the US standards body NIST.
- The network already uses the system for functions such as proofs of state, which confirm ledger updates, and for certain transaction types.
- ALGO rose from around $0.08 to close to $0.12 so far, bringing its market cap above $1 billion. It has risen more than 7.3% in the past 24 hours amid a broader market rally.
