Bitcoin kicked off the new week on a strong note, trading above $81,000 and grabbing investors’ attention. Gains as high as 3 percent across leading altcoins added to the positive sentiment. However, with key inflation reports coming up on Tuesday and Wednesday, the strength in cryptocurrencies could face headwinds and trigger a surprise pullback. Meanwhile, Donald Trump reacted sharply to Iran’s recent statements, though his main focus is now on his upcoming visit to China.
Pivotal market updates
The United States and Iran have failed to reach an agreement to end ongoing hostilities. On Sunday, Iran delivered its latest response to the US through Pakistani intermediaries, maintaining a consistent position since April. No progress has been made on either the nuclear issue or the status of the Strait of Hormuz.
Despite rising oil prices and higher bond yields, equity markets remained resilient. Brent crude jumped above $103 per barrel for a gain of more than 2 percent, reflecting the ongoing closure of the Strait of Hormuz, yet S&P 500 futures hovered just below all-time highs.
Referring to Iran’s response, Donald Trump publicly described it as “absolutely unacceptable.” With no agreement in sight, it remains unclear whether a major military escalation is imminent. For now, Trump appears to be prioritizing China, making a major development in the short term less likely.
Gold slipped below $4,700 per ounce. Investor expectations now lean toward the Federal Reserve leaving interest rates unchanged, possibly for the rest of the year. However, these outlooks can shift quickly; currently, CME FedWatch is pricing in the possibility that incoming Fed chair Warsh, who takes office on Friday, could opt for a rate hike.
Cryptocurrency outlook
BTC remains strong above the crucial $80,400 support level. Although it attempted to retest $83,000 over the last 24 hours, Iran’s latest moves have capped the attempt. At 5:30 PM, Trump is scheduled to speak at a health event, followed by hosting the national football champions at 11:00 PM. Updates on Iran, China, or Taiwan could emerge from either of these appearances. As is customary for Mondays, Trump is anticipated to offer some market-friendly remarks. Should he do so, crypto markets could gain further momentum; otherwise, the optimism might fade quickly.
If the optimistic scenario plays out, BTC could target $85,457 this week. However, a drop below the $80,400 support level could open the door for retracement towards $78,000 and potentially $75,800.
Altcoins appear to be following in BTC’s footsteps, with top tokens notching impressive daily gains. Though volatility remains high, many investors are watching for a breakout or a deeper correction driven by macroeconomic news.
Market participants are keeping a close eye on upcoming US inflation reports, as sustained higher inflation could challenge the Federal Reserve’s policy stance and, by extension, risk sentiment in crypto markets.
For now, traders are closely watching political developments in the US and the Middle East, while also bracing for monetary policy signals that could ripple through both traditional and digital asset markets in the coming days.
