The sector remains highly dependent on developments in the US-Iran confrontation in the Middle East, with prices reacting both to politicians’ statements and to incoming news from the region. Positive momentum was seen after US President Donald Trump extended the deadline of the ultimatum on reopening the Strait of Hormuz, and then stated that Washington and Tehran had begun ceasefire talks. However, investor enthusiasm quickly faded after representatives of the Islamic Republic denied holding consultations with the White House and presented a number of demands that are unlikely to be acceptable to Trump. These conditions reportedly include full Iranian control over the key oil shipping waterway as well as reparations from the United States. In addition, US officials have indicated a possible transition to a ground operation, while Tehran responded by threatening attacks on Saudi Arabia and the United Arab Emirates. At the same time, a source in the US Department of Defense said that an additional 10,000 troops could be deployed to the Persian Gulf region. The escalation is weighing on risk assets, as traders prefer safer stores of capital.
At the same time, the rise in hydrocarbon prices caused by disruptions to maritime traffic in a region that previously handled up to 20.0% of global oil supply is increasing the likelihood of higher global inflation and a prolonged period of elevated interest rates from major central banks. This view is supported by comments from Federal Reserve officials such as San Francisco Fed President Mary Daly, Chicago Fed President Austan Goolsbee, and Federal Reserve Vice Chair for Supervision Michael Barr. Policymakers are likely either to maintain a wait-and-see approach or turn more hawkish if consumer prices stabilize above the 2.0% target, which would further strengthen the US dollar against alternative assets.
Even so, analysts point to several positive signals. According to Bloomberg and Santiment, outflows of BTC and ETH from exchanges suggest that investors are shifting toward accumulation and are reluctant to sell. Over the past month, wallets holding between 10.0 and 10,000 BTC increased their balances by 0.45%, while Bitcoin ETF holdings grew by $2.5 billion, offsetting the decline seen earlier this year. In other words, large traders continue to hold crypto assets, but short-term reactions from smaller market participants are preventing a broader recovery. This is reflected in the Fear and Greed Index, which has risen to 13 but remains deep in the “extreme fear” zone.
Overall, the situation remains difficult, and under these conditions most major digital currencies may continue to consolidate or resume negative momentum next week.
