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:

• Trump Tacos?
• Bitcoin Mechanics.
• Cryptonary's Take.

Trump TACOs?

Last Friday, President Trump said that the US had met most of their objectives and they were close to "winding down" the war. However, just a day later, President Trump threatened the Iranians to open the Strait of Hormuz, giving them a 48 hour window to do so, and if not, the US would target Iranian energy infrastructure and power plants. The Iranians fired back that they would in turn target energy infrastructure in regional countries should their own be struck.

Going into the Sunday evening futures open, weekend escalations saw Brent Crude Oil open higher, Equity indexes lower, and US Bond Yields were substantially higher.

However, in the early morning (US time) today (Monday 23rd March), President Trump announced that the US and Iran have had "very good and productive conversations regarding a complete and total resolution" (to the war), with there now being a 5-day postponement to strikes on Iranian energy infrastructure, with the President instructing the Pentagon on this.

This Morning's Social Media Post from President Trumps

But within the hour, Iranian State media denied that talks were taking place between the US (Steve Witkoff) and Iran (Iran's FM Araghchi), however, Axios have since reported that three countries (Pakistan, Egypt and Turkey) have been relaying messages between the US and Iran over the last two days to help de-escalate tensions.

Markets have seen whip-sawing price action off the back of this morning's news flow with Brent Crude Oil down, Equity indexes rebounding, Bond Yields sharply lower, and Bitcoin being bid.

Below is Bitcoin's price action on the 1hr timeframe chart.

Bitcoin 1hr Chart:

If we then zoom back out again to the Daily timeframe charts, we can see how volatile the US2Y Bond Yield has been in just today's session alone.

US2Y Bond Yield 1D Chart:

For the risk-on move to stick, markets will be looking for follow-through from all parties: the US, the Iranians and the Israelis. It's possible that strikes still happen, particularly from the Israelis side on Iranian military sites.

For now, there's no guarantee that this risk-on move sticks, with there still being a plethora of uncertainties and questions:

1. Is President Trump using 5 days of limited strikes to move more personnel and military equipment into the region? As there are thousands of marines currently en route with another amphibious assault ship still en route to the Middle East. All with the view to taking Kharg Island, and taking control of Iranian oil.

2. Will the Israelis agree to the terms, and how privy are they to the negotiations, and if so, do they have a say so?

3. Will the Iranians want to continue the war as they now know President Trump's pain points, i.e., lower markets, the higher the chance that Trump pulls back, which may have been the case today and over the weekend.

Ultimately, this is an extremely choppy market with significant news headline risk, and should we see a deal be done between the US and Iran, we'll likely see a risk-on rally across the board.

However, a significant amount of damage has already been done, whether that be to energy infrastructure in the region which is likely to result in elevated oil prices for at least the next few months, or the rise in Bond Yields. The rise in Bond Yields, due to likely higher inflation (because of higher oil prices because of the conflict) to come, alongside increased Bond issuance (the raising of more debt to fund a war, or at least replenish munitions) is a tightening of financial conditions. This is negative for growth and liquidity. And with the Fed unlikely to cut interest rates anytime soon as they wait to see the effects of the conflict on the economy, they run the risk that they'll remain too tight for too long, risking the economy.

SOFR less US2Y Treasury - showing SOFR rates in repo markets and the Yield on the US2Y - conditions have now moved into tight/tightening

So, despite the potential wrapping up of the conflict in the Middle East (although we're still extremely sceptical that this conflict is over), it's still not the environment to own risk assets. The above chart shows that with financial conditions moving into a 'tightening' environment for the first time since early 2025, and more meaningfully since 2022, yes 2022, when the Fed raised interest rates from 0.50% to 5.50%. These environments have historically been negative for risk assets.

Bitcoin Mechanics

Going into this morning, Spot Cumulative Volume Delta was low, Open Interest was low, and Funding Rates were meaningfully negative. This set up the potential for a Short squeeze, which the de-escalation tweet from President Trump was the catalyst for.

Since then, we've seen Spot buying drive price higher with Open Interest remaining contained. The move from $68k to $71k has been spot-driven so far; however, this will need to continue in order for Bitcoin to make a meaningful breakout to the upside, with the key resistance levels coming at $72k and the $74k. An acceptance above $74k would open the door for a test of $78k.

Bitcoin: Price up, driven by a Short-squeeze

However, from a technical perspective, Bitcoin remains in a rising wedge, which has a bias for price to break down, rather than up, with the RSI rebounding but having broken below its uptrend line and finding resistance at its moving average.

Bitcoin 1D Chart

Should price reclaim $72k and then get acceptance above $74k, that would be an indication of strength that may even open the door for a more significant relief rally, although we'd expect it would need to be supported by a full de-escalation and a deal in the Middle East.

But this isn't our base case.

Our base case is for continued range-bound price action, whilst the macro backdrop remains unsupportive, with this likely to continue with the Fed remaining on hold, whilst the economy likely suffers at the hands of this. Alongside this, liquidity conditions continue to tighten, which negatively impacts risk assets.

Our framework points to lower prices in the months ahead, likely with on-chain cost basis models, suggesting that Bitcoin will revisit and bottom between $50k and $63k. Therefore, we remain patient with our plan being to deploy cash in the coming months into long-term Bitcoin buys in the given zone - $50k-$63k.

Cryptonary's Take

With what looked to be more meaningful escalations over the weekend in the Middle East were soon undone early Monday morning with risk assets repairing the weekend's losses on the news of negotiations between the US and the Iranians. Should negotiations continue and both sides talk constructively about reaching a deal, then a short-term rally in risk assets is possible.

However, recent market moves have seen financial conditions tighten significantly, whilst there's likely to be a significant inflation impulse in the coming months, which is expected to keep the Fed on hold, and potentially on hold for too long, which risks the economy. This is an unsupportive backdrop for risk assets, and therefore we remain in risk-off whilst we're looking for the $50k-$63k zone to be visited in the coming months.

For now, we're remaining patient with cash being our favoured position.

Key Dates Ahead

• April 3: Labour market report.

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.