Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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What happened?

Yesterday evening, President Trump announced a 2-week ceasefire between Iran and the US just a few hours before his self-set 8PM (ET) deadline. The basis for the ceasefire was Iran's 10-point plan, with the US stating that it was a starting point for negotiations and that it was 'workable'. Negotiations are set to begin this Friday in Pakistan with Vice President JD Vance leading them for the US. However, Vice President Vance has stated that the truce between the US and Iran is 'fragile'.

Markets have reacted positively upon President Trump's declaration for a ceasefire with:

• Oil down
• Dollar (DXY) down
• Bond Yields down
• Equities up (significantly)
• Crypto up
• Bitcoin is 5.8% since yesterday's daily open.

Whilst markets are celebrating the ceasefire, there is also scepticism that the ceasefire will hold, and/or a full agreement to end the war will be reached. After all, both the US and Iran are still quoted to be 'very far apart' on many of the points proposed by the Iranians in their 10-point plan. Some of these are:

1. Iranian control over the Strait of Hormuz (something that didn't exist pre-war).
2. Acceptance of Iran's uranium enrichment.
3. Withdrawal of US combat forces and for there to be no more US military bases in the region going forward.
4. Compensation for war damages - although Trump might allow a temporary toll on ships in the Strait so the Iranians can receive reparations via this method.

Potential Scenarios Going Forward:

1. The ceasefire holds, and a deal is done. The most bullish outcome for markets.
2. The ceasefire doesn't hold, and war escalates. Very bearish for risk assets.
3. The ceasefire holds, and a deal isn't reached during the 2 weeks. Bearish for risk assets.

Our base case is for the ceasefire to hold to allow for negotiations to take place. However, we're split as to whether a deal is reached, although we do slightly lean towards a deal being done. It seems that the two are very far apart for a deal to be reached. However, President Trump seems to want a deal to be done and is seemingly willing to make concessions. For instance, the IRGC (the Iranian Revolutionary Guard Corps) is charging ships to pass through the Strait, even during this ceasefire, something that the Trump administration previously stated was 'unacceptable'.

However, today, President Trump stated that it 'might be a joint US-Iran venture' for tolling ships passing through the Strait of Hormuz. Implying that the US would be part of collecting fees from ships passing through the Strait and policing the Strait alongside the Iranians. This is a considerable turnaround from the stance President Trump took just several days ago. This gives us belief that the US will do what's necessary to reach a deal with the Iranians.

Cryptonary's Take

There is room for risk assets to get some upside here in the near-term driven by the unwind of geopolitical tensions, but this assumes that the US will make a deal with Iran, and likely on the Iranians terms. Should we see this rally in risk assets sustain, we see Bitcoin trading into the $76k-$78k zone. However, it'll likely face resistance beyond that with some key cost on-chain levels between $78k and $84k.

Taking a more zoomed out view, financial markets liquidity is declining, whilst financial conditions have tightened materially in recent weeks. Therefore, the environment remains unsupportive for risk assets. We don't see this as a 2025 scenario, more a 2022. But due to bearish positioning, it's possible that this rally has legs. We wouldn't be surprised to see BTC trade into the low-$80k's, but we would be very surprised to see it trade into the high-$80k's.

Ultimately, we're expecting a rally, but a bear market rally.