The positive dynamics are likely driven mainly by technical factors, as long-term fundamentals for risk assets remain largely negative. Most leading tokens are trading within narrow ranges and have yet to determine a clear direction for further movement. The initial shock from the events in the Middle East has weakened, and traders who intended to exit digital assets have largely done so. Analysts at Glassnode AG believe the sector will require a significant inflow of institutional capital to break out of the stabilization phase, rather than continued rotation of coins among investors.
At the same time, the U.S.–Iran conflict increases the risk of a slowdown in the global economy due to the sharp rise in hydrocarbon prices. Over the longer term, this could lead to declines in equity markets followed by pressure on cryptocurrencies. Analysts currently estimate the probability of such a scenario at 35.0%, compared with only 20.0% at the beginning of last week.
Monetary factors are also weighing on the digital asset market, as uncertainty regarding the Federal Reserve’s monetary policy continues to increase. In February, signs of cooling in the labor market were observed: unemployment rose from 4.3% to 4.4%, while nonfarm payrolls unexpectedly declined by –92.0K instead of the expected increase of 58.0K. However, inflation remains significantly above the Fed’s 2.0% target, with the consumer price index standing at 2.4% year-over-year and the core indicator at 2.5%. This makes the decision regarding future interest rate changes more complex.
Most policymakers currently favor a cautious approach and are leaning toward maintaining existing credit conditions. Some officials, including Cleveland Federal Reserve President Beth Hammack, have even suggested the possibility of further rate increases, which continues to support the U.S. dollar. Meanwhile, despite moderate inflows into digital investment instruments, the Crypto Fear & Greed Index remains in the “extreme fear” zone at 15.
Meanwhile, the U.S. Senate approved a bipartisan housing bill that includes a provision prohibiting the Federal Reserve from issuing a central bank digital currency (CBDC) until the end of 2030. This effectively limits the country’s ability to compete with private stablecoins and with CBDC initiatives from other countries, particularly China.
On the positive side for the crypto sector, BlackRock Inc. launched a new exchange-traded fund called iShares Staked Ethereum Trust (ETHB). Unlike traditional crypto ETFs that invest in the spot market, ETHB allocates 70–95% of its assets to staking and distributes about 82% of staking rewards to investors through monthly payouts. Trading volume for the new instrument exceeded 15 million dollars on its first day.
Overall, sentiment in the cryptocurrency market remains mixed. Under these conditions, most major cryptocurrencies may continue consolidating or move lower in the coming week.
