Crypto steadies as Iran-U.S. pause sends oil tumbling, lifts risk assets

The crypto market opened the week on a positive note as a shift in the Middle East offered a modicum of relief to risk assets. The U.S. and Iran paused strikes over the Strait of Hormuz, sending Brent crude tumbling from above $100 to around $87 per barrel as mediators continued talks.

The move was felt across multiple asset classes. Nasdaq 100 and S&P 500 index futures are up 1.36% and 0.80%, respectively, while gold and silver are both higher as inflation fears unwind. The CoinDesk 20 Index (CD20) has gained 0.1% since midnight UTC, 1.6% over 24 hours.

Bitcoin BTC$65,318.04 is lower since midnight at $65,200, though this follows a spike to $65,600 at the start of futures trading on Sunday. The little-changed reading masks an underlying improvement in sentiment.

Ether (ETH) outperformed bitcoin on Monday, rising 0.51% to $1,963 and approaching the psychologically significant $2,000 level for the first time since the beginning of June.

The Fed is meeting this week and faces a decision on whether to raise interest rates for the first time in three years, with inflation running at 4.1% on the back of the oil surge spurred by the Iran war.

The pause in hostilities trimmed the odds of a hike, with markets now pricing a 30.5% chance of a move on Wednesday, down from 37.4% at Friday’s close, according to CME Group’s FedWatch tool.

• Bears take the hit as BTC bounces: Bears are paying the price for BTC’s positive turnaround since Sunday, which lifted the spot price back above $64,000. Futures liquidations data show forced closures of short (that is, bearish) bets accounted for most of the 24-hour liquidation tally of $312 million.
• Futures traders sit out the bounce: Futures traders don’t appear to be fully participating in the spot-price bounce. Open interest (OI) pulled back to 740K BTC from Friday’s spike to over 760K BTC. However, both annualized funding rates and the 24-hour cumulative volume delta (CVD) are positive, which could suggest a bullish bias in positioning.
• ETH futures confirm the outperformance: ETH outperformed BTC over the past 24 hours, extending the trend seen since the June 6 market bottom, and futures data appears to validate the price action.
• OI in ETH futures has jumped to 14.66 million ETH, the highest since June 7. More notably, funding rates remain positive, and ether’s 24-hour OI-adjusted CVD is the most positive among major cryptocurrencies. That’s a sign bulls may be leading the price action through market orders rather than passive limit orders.
• OI movers, gainers and laggards: Other major OI gainers include XLM, LTC and XMR, while SHIB and AVAX have seen capital outflows.
• Broader market looks bearish: Still, the broader market looks bearish, with only TRX and BNB also showing positive 24-hour CVDs. The rest of the majors have negative prints, which could point to bearish leadership elsewhere in the market.
• Volatility indexes signal calm: Bitcoin’s 30-day implied volatility index, BVIV, is in stasis near 40%, just above the recent two-month low of around 38% in a possible sign of market stability. Ether’s index, EVIV, is flashing a similar signal.
• Options skew, downside bias cooling: In Deribit-listed options, BTC puts continue to trade pricier than calls, suggesting a persistent bias toward downside protection. That said, at the front end, the put bias appears to be weakening, with the one-week put-call skew now at 9% versus nearly 13% on Friday. ETH skews are overall much lower than BTC’s, pointing to relatively measured demand for downside protection in ETH.

• DeFi tokens are the standout winners on Monday, with AAVE surging 9% and LDO$0.4033 rising 9.4% over the past 24 hours, while Ondo ONDO$0.4138 extended its recent run with a 7% gain.
• Lighter (LIT) reversed course, rising 4.71% since midnight UTC and 8.91% over 24 hours after several sessions of profit-taking, suggesting sellers may have exhausted themselves in the $2.13 range and the token is attempting to rebuild.
• PUMP$0.002015 was Monday’s top performer, increasing by 12% over 24 hours, continuing a run of speculative interest that has pushed it toward an $800 million market cap. Just two weeks ago it was at $570 million.
• Zcash (ZEC) struggled to keep pace with its peers, falling 1.95% to $497 as the privacy coin gave back some of its recent gains. Rival monero (XMR) shed 1.24% in a sector-wide pullback.
• CoinMarketCap’s Altcoin Season indicator has risen to 55/100 and the average relative strength index (RSI) recovered to 51.88, both pointing to a market that is gradually improving in terms of sentiment.