The sector’s performance remains dependent on geopolitical signals, which continue to shift. At the beginning of the week, investors were hoping for a quick resolution to the US-Iran conflict, as the sides were preparing for a second round of talks in Islamabad, while media reports suggested that Tehran was ready to abandon its nuclear program and transfer enriched uranium to third countries in exchange for access to frozen assets and security guarantees. This boosted risk appetite and pushed higher prices for assets seen as alternatives to the US dollar. By now, however, traders’ optimism has weakened: the Pakistan-mediated talks were canceled because no compromise was reached, and Iran continues to block the Strait of Hormuz while the United States maintains restrictions on the Islamic republic’s ports, with both sides periodically exchanging attacks and seizing commercial vessels, keeping regional tensions high. On the other hand, open hostilities have not resumed, and US President Donald Trump has announced an extension of the ceasefire “for an indefinite period.” Markets are hoping that the situation stabilizes in its current form and that the risks of further hydrocarbon price increases and a global recession will diminish.
Another factor limiting further gains in crypto prices today is Japan’s March inflation data: the core nationwide consumer price index came in at 1.8% year-on-year versus the expected 1.7%, while the corporate services price index rose by 3.1% against a forecast of 3.0%. Against this backdrop, the national regulator may move toward tighter monetary policy, which would weigh on the sector. Historically, the yen has been used to finance risk assets, including digital ones, so a stronger yen could reduce the volume of such operations.
Despite several factors that have restrained positive momentum in recent sessions, overall market sentiment is improving: the fear and greed index entered the “fear” zone after hitting a four-month high of 49, but has now returned to 39. At the same time, inflows into Bitcoin ETFs have now continued for eight straight days, reaching $2.1 billion, compared with $1.2 billion during the previous seven-day inflow streak in March.
The market is also under pressure from developments surrounding the Kelp DAO hack over the weekend, when attackers gained access to 116.5 thousand rsETH tokens worth $293.0 million. The incident exposed a systemic vulnerability in the DeFi market as a whole and triggered a significant outflow of client funds from similar projects, including major platforms such as Aave Labs, whose total value locked (TVL) fell from $26.3 billion to $17.7 billion. Analysts note that negative sentiment has intensified because the attack on Kelp DAO was not the first this month: on April 1, $293.0 million was stolen from the perpetual investment protocol Drift Foundation, built on Solana, after which smaller projects were also affected, including CoW Hosting Ltd., Zerion Software Inc., Rhea Finance, and Silo Finance. DeFi companies are now joining forces in an attempt to stabilize the situation and compensate financial losses. So far, more than 43.0 thousand ETH, or over $101.0 million, has been raised, though this still does not cover all losses.
On the positive side, the range of crypto instruments available to institutional traders continues to expand as interest in digital assets grows. Morgan Stanley’s investment division has launched a “Stablecoin Reserve Portfolio,” allowing stablecoin issuers to place reserves in one of the bank’s funds while earning interest. The offering is part of the Morgan Stanley Institutional Liquidity Funds (MSNXX) trust. In addition, this week crypto trading platform GSR Markets Pte. Ltd. launched its first exchange-traded crypto fund, GSR Crypto Core3 (BESO), which tracks the current price of three major tokens at once — BTC, ETH, and SOL — and offers staking rewards. On its first day of trading, the fund recorded nearly $5.0 million in volume.
Overall, sentiment in the digital asset market is improving, but conditions remain difficult and highly sensitive to geopolitical factors. Under these circumstances, most major assets are likely to continue posting moderate gains next week or move into consolidation.
