Signs of recovery have emerged in the cryptocurrency markets as geopolitical tensions that weighed on risk sentiment over the past two weeks have begun to subside. A brief truce between the United States and Iran led to a sharp drop in oil prices, fueling renewed appetite for riskier assets. While this shift has buoyed investor sentiment, market experts remain cautious about how lasting these effects will be amid ongoing volatility in global energy dynamics.
Bitcoin and altcoins register gains
Major cryptocurrencies have posted significant increases. Over the last 24 hours, Bitcoin advanced 3% to reach $71,600, while other leading coins—such as ether, XRP, and solana—recorded gains exceeding 5%. This momentum among altcoins was also evident in the broader CoinDesk 20 Index, which outpaced Bitcoin with a 4.2% rise, signaling that price growth is spreading throughout the market.
A key factor has been Iran’s decision to temporarily reopen the Strait of Hormuz, a strategic chokepoint for global oil shipments. The move led to volatile trading in oil futures, with US crude prices tumbling nearly 16% to $95 per barrel. The swift drop in energy prices eased inflation pressures and lowered expectations that the Federal Reserve would raise interest rates. Historically, such shifts have tended to support upward movement in riskier asset classes, including cryptocurrencies.
Meanwhile, indicators such as the 30-day implied volatility for both Bitcoin and ether have declined, suggesting that fear is ebbing in the market. Since spot exchange-traded funds (ETFs) were introduced two years ago, such volatility measures have become important gauges of risk appetite. Recent data shows that price swings across major cryptocurrencies have lessened, indicating a calmer environment for investors.
Market dynamics and institutional interest
Fresh developments are also unfolding on the institutional front. In the US, banking giant Morgan Stanley—which manages nearly $1.9 trillion in assets—is expected to launch trading for its Bitcoin ETF for the first time. Should the ETF see robust trading volumes and fund inflows, it would be viewed as a strong signal that institutional participation in the crypto space remains solid.
According to an analysis by Marex, there has been a renewed uptick in institutional demand through ETFs in recent weeks. When these funds see persistent inflows, post-decline recoveries tend to be more rapid, and prices can stay at elevated levels even as momentum cools.
Other dynamics driving the latest rally include the rapid closure of short positions. Anticipating further US-Iran tensions, traders had bet against the market, but a reversal in sentiment led to $431 million in short positions being liquidated within 24 hours—the largest such clearance since early March. Based on previous trends, these sharp upward moves are sometimes followed by periods of instability if fresh buying interest does not materialize.
Despite the recent slide, oil prices remain about $30 above where they stood prior to the late-February escalation. Given that the ceasefire is only temporary and shipping lanes and insurance costs have yet to return to pre-crisis levels, markets are bracing for the possibility that oil could stay near $100 per barrel. This uncertainty in the energy sector is seen as one of the major variables facing cryptocurrencies and other risk assets going forward.
Additionally, a weakening US dollar and surges in European and Asian equities have contributed to a temporary rise in global risk appetite. Notably, travel and automotive stocks across Europe have also rallied in this climate.
From a technical perspective, Bitcoin’s price chart currently shows the coin having moved above its 50-day moving average, suggesting that near-term bullishness could persist. Analysts highlight the 100-day moving average at $76,100 as the next key resistance level. Should the mood change and prices fall, the late-March lows around $65,000 are seen as a crucial support zone.
