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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Topics covered:

• US-Iran Negotiations Break Down.
• Bitcoin Holds Up.
• Cryptonary's Take.

US-Iran Negotiations Break Down

Markets traded well into last week's Friday close on the hopes that a deal would be reached between the US and Iran that would allow a full end to the war. However, in the early hours of Sunday morning (UK time), US Vice President JD Vance put out a statement where he said that 'we go back to the United States having not reached an agreement' and that he and the US have left a 'best and final offer' on the table for the Iranians to accept - which up until now, they have not.

With Crypto being the only market open at this time on the weekend, this was the only place to see the reaction. Over the next 16 hours, Bitcoin traded 4.1% lower, with price locally peaking at $73,700, and trading as low as $70,600 by 2PM UK time Sunday.

It is said that whilst some ground was made on some issues, key differences between the US delegate and the Iranians remain. These are said to include the Iranians being unwilling to give up the nuclear material and also their current control of the Strait of Hormuz. The US are said to be wanting the Strait to return to free passage for all vessels and for the Iranians to hand over their nuclear material whilst committing to no future development of nuclear weapons.

It is said that despite the US delegation, led by VP JD Vance, having returned to the US, negotiations are still continuing.

However, on Sunday, President Trump announced that the US is now looking to 'resume limited military strikes' (on Iran), whilst also blockading the Strait of Hormuz. This blockade would stop vessels leaving Iranian ports, crippling their oil exports (which would also hurt China as they're the main buyer of Iranian oil, and they need that oil), and therefore potentially crippling the Iranians economically. This may pressure the Iranians back to the deal-making table.

The question is: how will this actually play out in reality? Say a Chinese ship carrying oil is leaving an Iranian port, how will the US respond? Will they fire at it, sink it etc? This would be a huge escalation and potentially even bring the Chinese more meaningfully into the war (rumours are that they've been aiding the Iranians with intelligence). Will a Chinese tanker even attempt to leave an Iranian port loaded with oil and even attempt the journey? This is a key variable we’ll be watching over the coming days.

Right now as of late Monday-morning UK time, it's hard to know what will happen. We’ll know more over the coming days.

Either way, markets have reacted relatively well following the lack of a deal over the weekend, and with now the threat of escalation.

The Nasdaq has opened lower, but is climbing going into the open, although still down 0.6% on the day.

Nasdaq 1D Chart

Alongside this, the US2Y Bond Yield opened the day higher, although it has pulled back since, with the US2Y Yield now up just 0.11% on the day. This suggests that there is a small rotation into Bonds, likely some market participants choosing to move into safety still given the geopolitical uncertainty.

US2Y Bond Yield 1D Chart

Overall, risk assets have held up relatively well, Bitcoin included, still holding the $71k level. However, should the Strait remain closed, oil prices will remain elevated and this threatens growth in the medium and long-term. Following the announcement that the US and Iran didn't reach a deal, and now with President Trump introducing a US blockade of Iran and the Strait of Hormuz, Brent Crude Oil has shot up to the $103 level, having traded as high as $105.

Brent Crude Oil 1D Chart

Risk assets have ultimately held up well, and this may be due to the fact that both sides are still negotiating, with there being widespread hope for a deal. However, it may also be due to market participants not wanting to miss out on a rally upon potential good news of a final deal being done. In recent years, the market has been taught to 'buy the dip' as President Trump is known to TACO (Trump Always Chickens Out), and this has preceded a major rally in markets. For example, during the tariff tantrum of 2025, the S&P 500 bottomed on April 7th 2025, and when Trump TACO'd, the S&P 500 rallied 23% by mid-May of that same year.

S&P500 Rallying Off The 2025 Tariff Tantrum Bottom

Market participants are potentially taking the view that they'd rather be exposed to downside than be overweight cash, miss out on a major rally, that gives few pull backs for investors to buy back in, and then be left explaining to their investors why they're left sidelined. This is probably why risk assets have been bid, investors are predicting that President Trump won't want this to be a pro-longed war, and therefore investors are being ahead of the inevitable rally to new highs. After all, the Earnings outlook for US companies this year remains positive.

Bitcoin Holds Up

Despite the negative news from Vice President JD Vance that the US and Iran hadn't reached a deal, Bitcoin traded down from the high-$73k's into the mid-$70k's - many would have expected it to trade lower given the negative news.

Alongside this, positioning in Bitcoin remains relatively constructive. We have:

• Open Interest increasing but nowhere near elevated levels.
• Funding Rates flat to negative (reflects a bearish sentiment amongst traders willing to pay a premium to be Short, not always a good thing, and it opens the door for Shorts to be squeezed).
• Coinbase Premium is positive, and it has remained positive despite price trading down from $73k into $70k over the last 24 hours.

Coinbase Premium Remains In Positive Territory

It seems that the market has priced in the US-Iran war, or at least the worst of it, and risk assets can continue moving higher here, at least in the short-term. The VIX supports this having dropped below 20. However, should we see the Strait of Hormuz remain closed for more weeks, and hostilities escalate i.e., the US and the Israelis back to full-throttle bombing Iran, then that might be the catalyst for markets to more meaningfully pull back.

However, should we not see that, risk assets could continue moving higher particularly if the upcoming US corporate earnings season is a positive one. We expect that it will be.

In the short-term, we're bullish as we expect geopolitical tensions to unwind, even if there's small escalations in the coming days. We expect the unwinding of geopolitical tensions to allow a small rally in Crypto and Bitcoin that sees bearish positioning forced to chase back in, and push the rally higher. This sentiment is reflected in the negative funding rates we mentioned above, alongside the negative sentiment as shown in the Fear & Greed Index.

Fear & Greed Index At Lows

While still in ‘Extreme Fear’, the index has been trending higher over the past week, from 11 to 16, and putting in what looks to be a ‘rounding bottom’ formation.

Unfortunately, should we be right in calling for a rally now, we would expect it to be a bear market rally with the key sticking points being the on-chain resistance levels in the late-$70k's to the early-$80k's. The most notable of these is the Short-Term Holder Cost Basis which is currently at $80,500.

If we look back to prior bear markets, the Short-Term Holder Cost Basis has proven to be a key resistance level in bear markets. As Short-Term Holders see their coins go back to break-even levels, having traded in a loss for a significant period of time, they tend to want to sell into break-even, hence it becomes a meaningful resistance level.

STH SOPR

Cryptonary's Take

This weekend's news of a deal not being reached between the US and the Iranians doesn't change our short-term bullish stance, although it is a cautiously bullish stance. We also expect that should we trade higher, price will meet a number of significant resistances between the $78k and $82k area, and therefore we expect a rally to stall out there, before it trades lower again.

Ultimately, we expect a rally, but for it to be a bear market rally as financial market liquidity is constrained whilst there is little room for the Fed to step in considering the higher inflation we're likely to get in the coming months.

We're cautiously optimistic, but we're not bullish looking 3-4 months out as we expect a rally to locally top between $78k and $82k, before price then rolls over and tests the $50k-$63k zone.

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.