Derivatives Market: Resilience Despite Volatility

Despite recent turbulence, Bitcoin’s derivatives market has shown notable stability. Monday’s short rally led to $193 million in long liquidations—representing just 0.3% of total open interest, which held steady at $68 billion. A 4.4% price drop within 12 hours is not considered critical for BTC, as similar pullbacks have occurred three times in the past month. Still, some traders warn that renewed escalation or a prolonged conflict with Iran could have broader economic consequences, potentially reinforcing risk-averse strategies.

Middle East Conflict and Its Impact on Bitcoin Mining

Amid escalating tensions, analysts noted a significant drop in Bitcoin’s network hashrate—down 8% in four days from 943.6M TH/s to 865.1M TH/s—sparking speculation about mining disruptions in the region. Iran, known for its sizable shadow mining sector (estimated at up to 2 GW), is a frequent subject of debate, though reliable data remains scarce.

Daniel Batten points out that such hashrate fluctuations are often tied to temporary power generation reductions in the United States. For example, on April 22, hashrate fell 27% after severe storms in Texas and Oklahoma. Extreme weather is an increasingly common cause of major mining interruptions, sometimes more than geopolitical factors.

Fed Policy Expectations and Market Response

Monday also saw oil prices drop sharply from recent highs of $77 as tensions eased, while the S&P 500 rose 1%. Following a retaliatory strike in Qatar, traders ramped up bets on a Federal Reserve rate cut in the coming months. CME Group’s FedWatch tool shows the odds of the Fed maintaining its 4.25% rate through November have fallen to 8.4% (from 17.1% last week), while chances of a cut to 3.75% or lower have jumped from 38% to 53%. This shift is pushing major market players to seek alternative returns—including in bitcoin.

Bitcoin futures aggregate open interest, USD. Source: CoinGlassBitcoin futures aggregate open interest, USD. Source: CoinGlass

While it may be too early to expect a sustained rally solely on hopes of de-escalation, bitcoin’s rapid rebound above $100,000 highlights robust institutional demand—even amid ongoing global uncertainty.