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This Week's Setup - 16/03/2026

Since our March 12th Market Update, Bitcoin has rallied into new local highs driven by a short squeeze and $763m in weekly ETF inflows. Brent remains above $100 despite the IEA’s record 400m barrel release. The US is now planning a coalition to escort ships through the Strait, though key European allies including the UK have declined. Both sides have hinted at ceasefire conditions for the first time. This report builds on that.

Brent Crude Oil Price Chart:

Is the Trump Administration Looking for an Off-Ramp?

The conflict in the Middle East has continued over the weekend, with the Iranians continuing to bomb Israel and pressuring the Trump administration by keeping the Strait of Hormuz closed. This has resulted in Brent Crude Oil trading in the low $100s/barrel as of this morning.

However, price is lower today since the futures open last night on the news that the US plans to announce a coalition to escort ships through the Strait of Hormuz - although several European nations suggest that they won't participate in this (the UK being one).

Brent Crude Oil price is likely to remain elevated whilst the Strait remains closed with oil producers in the region slashing output. This is shown in the oil futures curve with even the long-dated oil futures curve shifting higher i.e., the market expects higher oil prices for longer.

And this trend will continue, the longer the Strait remains closed. Just in the last week, Kuwait has slashed its output from 2.6m barrels per day to 1.3m barrels per day, and the UAE has slashed its output from 3.5m barrels per day to 2m barrels per day. The below chart shows the significant drop in the number of vessels passing through the Strait.

Vessel Traffic Through Strait of Hormuz:

The higher oil prices may be inflationary in the short-term, and that would be the bulk of the impact (higher oil prices) should the Strait remain closed for just a few more weeks. But, should this conflict be more prolonged, i.e., longer than just a few more weeks, the higher oil prices will be longer-term deflationary as consumer spending decreases and economic growth slows.

In terms of how prolonged this war might be, it's very difficult to say. It seems that both the Iranians and the Americans have said they're not looking for a ceasefire yet, but the Iranians have said that for a ceasefire to happen, there needs to be a 'pledge from the US and Israel to not attack in the future' - 'guarantees against future aggression', whilst they've also demanded 'reparations'. Even the mention of a ceasefire in itself is a suggestion that it's a possibility. However, the Trump administration has said that this 'isn't enough' (what the Iranians are offering) for a ceasefire, but the Trump administration's goals were originally for regime change, but they have now steered away from that, with the objectives becoming increasingly unknown.

Despite recent escalations (the US/Israel bombing Kharg Island - Iran's critical oil export hub, and the Iranians continuing to bomb civilian sites in the UAE - Dubai International Airport), it may be the case that both sides are recognising the potential for a stalemate - the Iranian's have taken an immense amount of damage, whilst the US have bombed Iran, and misjudged their ability to topple the regime.

Should a ceasefire be reached in the coming 1-2 weeks, it would likely see the price of oil come down substantially on the news break, but the price would likely remain elevated for a number of months until production capacity is reached again. Ceasefire news, however, would be very positive for risk assets.

Whilst a ceasefire feels possible, our view is that the Iranians might be less inclined to agree to a ceasefire, whilst they continue to target the price of oil moving higher as their weapon of choice, which potentially results in the US backing away.

The Fed Meets on Wednesday

This Wednesday, the Fed will meet to decide interest rates, and they'll release a new Summary of Economic Projections. It's widely expected that the Fed will keep rates on hold, and we also share this view.

In the Summary of Economic Projections, we expect growth to be revised lower and for inflation to be revised higher. This may lead to a bearish reaction from the market, but it's also possible that the market looks through it, as they'll expect Powell to be relatively measured in his Press Conference.

The inflation will come due to higher oil prices which the Fed may choose to look through, although we doubt they'll use the term 'transitory'. In terms of higher inflation leading the Fed to hike rates, we see this is a highly unlikely outcome. The Fed is unlikely to hike rates into a supply-side issue, which is ultimately likely to lead to a demand-side issue (recessionary).

Whilst this conflict is likely to keep the Fed on hold for the foreseeable future, it's possible that the negative impact on growth (due to the higher inflation) actually sees the Fed cut more times in 2026 than the market expects.

The market currently expects the Fed to cut once in 2026, and towards the back-end of the year. But, a Warsh-led Fed may choose to look through the inflation (that's supply side driven) and choose to anticipate the issues that this may cause beyond it, i.e., weaker growth into what is an already weak labour market, as we saw in the most recent print, where BLS reported negative Payrolls numbers.

Negative US Nonfarm Payrolls:

This is a potential tailwind for markets by the back end of Q2. However, it does depend on the conflict in the Middle East being resolved in the coming weeks rather than it becoming a multi-month conflict - that is the key.

Ultimately, it can be summarised down to this:

• Conflict lasts a few more weeks; the Fed holds rates on pause in the coming months, but then cuts in the second half of the year.
• Conflict lasts a few more months; the Fed holds rates on pause for Q2 and likely most of Q3, before aggressively cutting rates into accommodative territory starting in Q4, and lasting into mid-2027.

Both outcomes are bullish. 1 will give upside, but limited upside in the coming months, but the bear market likely continues beyond that. 2 likely sees the continuation of the bear market in the short and medium term, before rates are cut aggressively starting in Q4. This would bring prices lower in the short-term before propelling them substantially higher in Q4, and into 2027.

We'll remain prepared for both potential outcomes.

Bitcoin in the Short-Term?

Bitcoin has opened the week, rallying into new local highs off the back of a Short-squeeze and positive ETF flows last week. This rally has felt somewhat overdue, particularly as Crypto majors held well last week as the equity indexes pulled back.

Last week, the Bitcoin ETFs saw $763.4m of net inflows, with these inflows being dominated by IBIT (Blackrock).

Bitcoin ETF Flows:

Alongside this, Funding Rates were negative across the board on many of the major coins. This set up the Short-squeeze on Sunday that followed through into Monday morning.

However, there are a plethora of on-chain resistances between $78k-$84k, so we see that zone as a likely local top for price, if price can even get there. Fundamentally, there's no reason why prices can't get there. But technically, when looking at the charts, both Bitcoin and SOL's price are in rising wedge patterns. These patterns historically have a bias for price to break down rather than up.

BTC Rising Wedge 1D Chart:

SOL Rising Wedge 1D Chart:

Both of these charts indicate that the price is currently trading at a resistance level.

ETH has broken out of its rising wedge and is therefore the exception. However, ETH has a significant resistance overhead at $2,400.

ETH Rising Wedge Broken to the Upside:

Cryptonary's Take

Our short-term bullish thesis that we reported on last week is in the process of playing out, and with Bitcoin at $74k, it can run further to $75k-$78k, but the risk/reward for chasing further upside from here is not favourable in our view. We expect prices to locally top in the mid-to-high $70ks, and for prices to turn lower back into the $60ks.

It remains our view that the macro outlook isn't constructive over the medium or long-term, be that, a lack of liquidity, lack of rate cuts, risks to growth, and rising inflation, therefore we remain of the view that Bitcoin will pull back into the low $60ks and likely the $50ks. Should we be right in this view, $50k-$63k is where our framework identifies the strongest long-term risk/reward, based on on-chain cost basis models and historical cycle data.

In the meantime, we're exercising patience as the data suggests to us that we'll see lower prices in the months ahead.

Key Dates Ahead

• Mar 17–18: FOMC 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.