Bitcoin and global equities found their footing after a turbulent start to the week that rattled risk assets. As military tensions flared between the United States, Israel, and Iran, oil prices surged in the early days, putting pressure on more volatile investments. However, as the week progressed, Bitcoin soared above $70,000 to notch weekly gains around 10 percent, while S&P 500 futures rebounded from session lows, signaling a shift in market mood.
Market Panic Eases After Initial Shock
The initial turmoil in markets was sparked by reports of disruption to oil tankers passing through the Strait of Hormuz. This vital corridor for global crude supplies sent energy prices sharply higher, prompting investors to seek safer assets. But with US authorities moving to provide naval escorts and expanding political risk insurance for tanker transits, the climate of panic began to subside. Throughout this period, Bitcoin staged a notable recovery—bouncing from weekend lows near $65,000 to testing almost $74,000 by midweek.
A similar trajectory played out across equities, with S&P 500 futures dipping as low as 6,718 points on Tuesday before marching back toward the 6,840 mark. This rebound in risk appetite suggested that, following the initial shock, investors shifted to a more selective—rather than outright defensive—approach. The momentum also carried over to the cryptocurrency market, where buying activity regained strength.
Rising Yields Shift Fed Rate Cut Odds
Yet the bond market signaled lingering caution, as US Treasury yields climbed steadily for four consecutive days. The yield on the benchmark ten-year note jumped from 3.93% to 4.15%, while the yield on the two-year, considered even more sensitive to rate expectations, rose from 3.37% to about 3.60%. This surge reflected growing concerns that higher energy prices could reignite inflation, potentially causing the Federal Reserve to move more slowly on interest rate cuts.
Bryan Tan, a trader at Wintermute, highlighted that the rates market exposes an ongoing tension: resilient US economic data alongside persistent, energy-driven inflation could keep the Fed on hold for longer than many anticipate.
According to interest rate futures, the probability of two 25-basis-point Fed rate cuts this year has dropped below 50 percent, down sharply from about 80 percent before tensions flared. Further muddying the policy outlook, US President Donald Trump’s official nomination of Kevin Warsh as Federal Reserve chair has introduced uncertainty. Warsh, a former Fed board member, is closely watched for his views on monetary policy.
Focus Turns to Jobs and Wage Data
Recent US macroeconomic data have further fueled the upward drift in bond yields. The ISM index for the services sector climbed to 56.1 in February, indicating solid expansion, while the ADP report showed private payrolls grew by 63,000 in the same month. These figures point to a resilient economy—prompting markets to price Fed rate cut expectations more cautiously.
Jack Prandelli, an analyst, noted that following major geopolitical shocks, oil prices often drift higher over subsequent weeks, even as markets sometimes underestimate initial supply risks.
Now, investor attention is turning to the upcoming US non-farm payrolls and wage growth data. If results come in well above expectations, hopes for imminent Fed rate cuts could take another hit—introducing new volatility to both stock and cryptocurrency markets. While Bitcoin’s rebound continues, signals from the bond market make clear that caution still lingers, and a lasting risk-off posture hasn’t fully abated.
