Topics covered:

• US-Iran, What's Going On?
• How Is Bitcoin Holding Up?
• Cryptonary's Take

US-Iran, What's Going On?

After scheduled negotiations between the US envoy and the Iranian delegate failed to go ahead on Wednesday (yesterday) due to the Iranians' rejection of them, we have seen a re-escalation of hostilities in the Strait of Hormuz. The IRGC have seized several vessels, the UK navy has reported two vessels being fired upon, US ships turned two Iranian vessels carrying oil around, with the US also claiming that they've turned around 31 vessels since the blockade began. 

In the meantime, the White House is still waiting to hear from Tehran on their version of a new peace proposal; however, this hasn't yet come through. And overnight, the Iranian President Pezeshkian has said that the Iranians want to return to dialogue but are unwilling to do so given the continued US blockade of Iran. There have been reports that President Trump's ceasefire had been extended by 3-5 days, however Trump's Press Secretary Karoline Leavitt said yesterday that this wasn't the case. Is the ceasefire still intact, and if so, has it been violated? Once again, White House Press Secretary Leavitt said that Iran's seizure of ships in the Strait wasn't a violation of the ceasefire. Yes, we're as bemused as most by all this. 

As things stand, both sides aren't looking to return to outright fighting, but there is a 'deadlock' over the Strait of Hormuz. 

The Iranians believe that closing the Strait will result in higher oil prices and, therefore, higher inflation, which, as a result, will apply enough pressure to President Trump that he'll back off. Trump and the Americans believe that the US blockade of Iran will cut off Iran economically, which will result in Iran coming to the negotiating table first. This could take several more weeks to play out, if not even longer. Alongside the above, an alternative remains on the table that both sides return to outright fighting. 

Ultimately, a diplomatic solution doesn't look likely in the short-term with both sides using the Strait of Hormuz to gain an advantage before potentially returning to negotiations. 

Markets have begun pricing in a more prolonged conflict. This is shown in the oil markets. Brent Crude Oil has now risen above $100/barrel again.

Brent Crude Oil Rises Above $100/Barrel Again

Whilst the Dollar and Bond Yields have shown small rebounds. The Dollar has rebounded from a low of 97.65 last Friday to 98.65 today.

Dollar Index (DXY) Rebounds Slightly

The US2Y Yield has climbed by 12 basis points in the same timeframe.

US2Y Yield Also Showing A Small Move Higher

The stock indexes, however, are consolidating at their highs, having been driven by AI capex spend and positive earnings growth. The Nasdaq is consolidating at its all-time highs despite being overbought.

Nasdaq Consolidating At Highs

Bitcoin has also performed well recently, with price up 19.6% off the range lows of $65k (where price consolidated between $65k and $70k for several weeks).

Bitcoin's Bear Flag and Key Cost Basis Levels

How Is Bitcoin Holding Up?

However, Bitcoin has moved towards the top border of the bear flag, which also aligns with several key on-chain cost basis levels that may act as resistance for price. We have highlighted this in the green circle on the chart above.

Those levels are:

• the True Market Mean at $78,100.
• the Short-Term Holder Cost Basis at $79,400.
• the 128D Moving Average at $77,200.
• the ETF Cost Basis at $82,200.

Historically, in prior bear markets, these levels have acted as resistance for Bitcoin, which has rejected these levels, only then to move lower.  We have highlighted the examples in 2022, and note that when they were reclaimed in 2024, this was significant as it reconvened the bull.

Key Costs Basis Levels in Prior Bear Markets Being Key Inflection Points

The data above suggests that the $78k-$82k level for Bitcoin is an important level, where we either see the resumption of the bear, or we flip back to a bull market. However, for the bullish outcome to be the case, the price would need to comfortably reclaim $82k and hold above it.

With Bitcoin currently trading in the $77k's, just a 5.3% move higher would get Bitcoin north of $82k. And the mechanics that have driven Bitcoin's move from $65k to $77k today still look favourable. 

For instance:

• Funding Rates remain negative (due to there being Short open interest and a strong Spot bid).
• ETFs have been seeing more significant net inflows.
• A positive Coinbase Premium has remained consistent.

All the above has helped drive Bitcoin higher despite the negative headlines, and this mechanics setup is still the case today. So, it's possible that Bitcoin can climb to $82k, say, driven by the supportive flows and Shorts continuing to get squeezed out. However, Bitcoin is now at a key on-chain resistance level, which has proven too significant in prior bear markets. 

For those feeling 'fomo' today, this is probably not the time to be chasing this rally as Bitcoin is now just shy of testing a key inflection point. 

In terms of helping us assess whether this rally can reclaim $82k, hold above it, and then push onto $90k, say, we'll be watching how market participants behave should Bitcoin test $80k-$82k. For that, we'll look at SOPR (Spent Output Profit Ratio) and the STH MVRV. 

In prior bear markets, the SOPR has remained in loss (red territory), and it has used the 0 line as resistance. This has indicated that investors have been in losses and when they've got back to break-even, they've sold and left the market rather than holding their coins in expectation of profit. 

Today, we've seen SOPR move above the 0 line and hold above it, using it as support. This is a positive development, but we have seen in times before that brief periods above this 0 line can happen, for the metric to then fall back below as price rejects into key levels - we're now at one of those inflection points.

STH-SOPR Is Holding Above The 0 Line For Now

This is positive, as it means market participants are confident in the market's rebound, allowing them to sell their coins for profit rather than at a loss. However, we note that this is a brief move above the horizontal 0 line, and this metric can still fall back into the red, especially if the price rejects at $78k-$82k. 

If we then look at the Short-Term Holder MVRV, we can see that this metric has moved into the horizontal 0 line, and it's finding it to be resistance for now. This is a more negative sign.

Short-Term Holder MVRV

We'll continue watching these two indicators for further signs of investor behaviour to help us determine whether Bitcoin can flip this key bear market resistance level. 

Cryptonary's Take

Bitcoin is at a key inflection point here as price sits at $77k and it moves into the key on-chain resistance zone between $78k and $82k. In prior bear markets, this on-chain resistance zone has proven to be too much for price to overcome, and price has rejected from this area, hence our caution at the $80k-$82k level. 

But, the mechanics are supportive, and that can drive a move into the $80k-$82k zone, and potentially slightly higher should Shorts get overconfident and squeezed out.

We would, however, suggest caution here. Bitcoin has put in a good rally, +32.15% from the early-February lows, and the price is now moving into a key on-chain resistance zone that has historically seen prices rejected from it and move lower. For those who remain overweight to risk, we'd suggest risking off between $78k and $82k. If price comfortably reclaims $82k, holds above, and flips key on-chain resistance levels into new support, then we can reconsider our thesis. 

For now, though, we remain of the view that we're in a bear market and that prices will come down in late-Q2 and/or Q3 of this year, and that'll be our buying opportunity ahead of a new bull market driven by Fed rate cuts beginning in Q4 this year. 

Key Dates Ahead:

• 29th April: Fed Meeting

This content is for informational and educational purposes only. Cryptonary is not authorised or regulated by the Financial Conduct Authority (FCA) or any other financial regulatory body. Nothing in this publication constitutes a personal recommendation or advice to buy, sell, or hold any virtual asset. Virtual assets may lose their value in full or in part and are subject to extreme volatility. You can lose all invested amounts and do not benefit from any form of financial protection. Past performance does not indicate future results.