The return of upward price momentum has been driven primarily by a combination of geopolitical and monetary factors. US and Iranian representatives have reportedly agreed to a two-week ceasefire, during which intensive talks mediated by Pakistan are expected to take place in order to discuss a final peace plan. Such an agreement could define the terms for ending hostilities and help stabilize the broader situation in the Middle East. Investors responded positively to the start of consultations, as such initiatives significantly reduce the risks of further increases in energy prices and a broader global economic slowdown. At the same time, the market is largely overlooking the obstacles that could complicate any final peace agreement, such as Tehran’s reluctance to fully restore freedom of navigation through the Strait of Hormuz or Washington’s refusal to recognize Iran’s right to pursue a civilian nuclear program. For now, traders do not see these issues as decisive and are once again rotating into risk assets while moving away from the US dollar. Additional enthusiasm in the crypto community was fueled by reports that Iran, which plans to impose a $1.0 duty on every barrel of oil transported through the Strait of Hormuz, may seek to collect those payments in “digital gold.” If such a plan is implemented, the international importance of Bitcoin and interest in it from governments around the world could increase significantly, providing further support for bullish price action. On the other hand, the US dollar remains under pressure following the release of minutes from the latest Federal Reserve meeting, during which officials left open the possibility of an interest rate cut by the end of the year if higher gasoline prices begin to weigh on the labor market and household purchasing power. For now, however, the current macroeconomic backdrop does not fully justify such a move: the US economy is slowing but remains in relatively solid shape, with GDP rising by 0.5% in the fourth quarter, the manufacturing PMI increasing to 52.3 points, and the services PMI easing to 53.9 points in March. Inflationary pressure also remains well above the Fed’s 2.0% target, with the February personal consumption expenditures index coming in at 3.0%.
Several additional developments have also supported the digital asset market. On Wednesday, financial conglomerate Morgan Stanley launched its own spot Bitcoin ETF on the New York Stock Exchange under the name Morgan Stanley Bitcoin Trust, trading under the ticker #MSBT. On its first day of trading alone, the fund attracted more than $30.0 million in inflows. Amy Oldenburg, head of digital assets at Morgan Stanley, said in an interview with Bloomberg that the product had become the most successful ETF launch in the bank’s history and described it as only the beginning of a long-term strategy to develop and bring new digital asset products to market. It is also worth noting that the Republican administration is increasing pressure on Congress to accelerate the adoption of the CLARITY Act, a bill aimed at establishing strict federal oversight of stablecoins. In an article published by The Wall Street Journal, US Treasury Secretary Scott Bessent said the legislation is essential for creating clear regulatory rules for digital assets, including cryptocurrencies, tokenized assets, and decentralized exchanges. He warned that with the global crypto market now valued at $3.0 trillion and nearly one in six Americans holding digital assets, “the stakes for US leadership in financial innovation have never been higher,” and that delays in creating a legal framework could cause the country to lose that leadership.
Overall, sentiment in the cryptocurrency market is improving, although conditions remain complicated, as reflected by the Fear and Greed Index, which is still in the “extreme fear” zone at 16. Under these conditions, most major cryptocurrencies could continue a moderate recovery next week or shift into a consolidation phase.
