Topics covered:

• US-Iran In Deadlock?
• This Wednesday's Fed Meeting.
• Bitcoin Chops In the Late $70k's.
• Cryptonary's Take.

US-Iran In Deadlock?

Another weekend has passed without US-Iran talks. There was hope going into this weekend that the Iranians (FM Araghchi) and the US envoy (Steve Witkoff and Jared Kushner) might meet in Islamabad, as Iran's Foreign Minister Araghchi was in Islamabad. However, Araghchi and the Iranians weren't interested in talks, meaning the US envoy didn't leave the US for Islamabad. 

Then, in the last 24 hours, Pakistani mediators said that the Iranians had proposed an 11-point plan to end the war. This included:

• War reparations paid to Iran.
• No discussion on the nuclear programme.
• Lifting of sanctions.
• Iran manages the Strait of Hormuz.

The above however, is all dependent on the US blockade of Iran ending. The Iranians won't negotiate until that is lifted. And from the US side, most of the above are 'non-starters'. This leaves us at a deadlock. Neither the Iranians are willing to negotiate until the blockade is lifted, and the US aren't going to lift the blockade as that's their main tool for pressuring the Iranians back to the negotiating table. Meanwhile, the US is moving more military equipment into the region. 

Despite President Trump saying that the US blockade of Iran is 'total', it's not. In the last 24 hours, 7 ships crossed the Strait, although they were mostly cargo and dry bulk vessels. Some oil tankers are getting through, however, most are being turned around by the US military. 

Today, President Trump is expected to hold a meeting with his national security and foreign policy team in regards to the deadlocked negotiations, and potential next steps. 

Our base case is for the blockade of Iran to remain, with there being a small chance (20%) that there's a full return to fighting (both sides striking each other). 

Markets however, are beginning to move on from this, although Brent Crude Oil remains at elevated levels due to the Strait being closed, and with there being little reason as to why it would open anytime soon.

Brent Crude Oil 1D Chart

The Nasdaq on the other hand, and hence why we say that markets are beginning to move on from this, has surged to new all-time highs and it's currently up 0.17% in pre-market trading.

Nasdaq at All-Time Highs

The move has been driven by a few factors, one being a short-squeeze, and the second being that corporates are estimating constructive Q1 earnings, driven by big tech. This week, the market will closely watch the earnings reports, particularly that of the big tech companies. They report on Wednesday and Thursday:

• Microsoft: EPS est. $4.04-$4.07 (+16%-18% YoY growth)
• Amazon: EPS est. $1.61-$1.65 (modest YoY growth)
• Alphabet/Google: EPS est. $2.62-$2.67 (YoY decline, pressure from depreciation)
• Meta: EPS est. $6.64-$6.71 (strong YoY growth)
• Apple: EPS est. $1.93-$1.95 (+15%-17% YoY growth)

Despite the macro worries, corporate earnings remain resilient which is why stock indexes have bounced and moved to new all-time highs. 

Should corporations, particularly big tech, not report positively this Wednesday and Thursday, then it's very possible that the indexes (S&P and Nasdaq) pull back. This would still be quite normal given the move higher that we've seen in the last few weeks. 

This Week's Fed Meeting

Also this Wednesday, we have Powell's last Fed Meeting - or what is expected to be his last Fed Meeting. This should now be his last meeting, as the US Department of Justice has dropped its criminal probe of Chairman Powell. This allows for Kevin Warsh to take over the Fed, and for Powell to step down as Chairman, although we think likely to remain at the Fed as a Governor, at least in the short-term. 

So, going into Wednesday's meeting with inflation rising, and likely to continue rising, the Fed isn't able to move. This means that interest rates are going to remain unchanged, and it's likely that Powell will allude to that remaining the case. However, it is his last meeting as Chairman, and so in terms of forward guidance, he may not even commit to that - as he won't be the Chairman from June's meeting. 

What journalists might push Powell on is whether he's going to stay on as a Governor. Once again, he's likely to give little away in this regard.

We're expecting the market reaction to be very muted and for the market to move on from the event quickly. 

Ultimately, the status quo for risk assets remains the same - financial conditions are tightening as a longer-term trend, despite some recent short-term easing that now looks to have concluded, alongside the Fed that isn't cutting interest rates. 

The stock indexes may continue moving higher in the quarters ahead as they're driven by the AI capital expenditure and the AI productivity boom. However, crypto isn't driven by this, it's driven by liquidity, which is currently unsupportive. This means that we may see Crypto struggle over the coming 1-2 quarters despite the stock indexes holding up, and even performing positively. 

Bitcoin Chops In the Late-$70k's

In the last week, Bitcoin has held up in the late $70k's, but it has been unable to breach $80k. The price move up has been driven by Spot buying and Shorts being squeezed. That dynamic that has driven price higher, is mostly still the case today, however we are beginning to see Spot buying slow down.

Bitcoin Mechanics:

The Funding Rate remains majorly negative, meaning there are still large Shorts that may be vulnerable to further squeezes. However, we are seeing the Spot bid taper off. We'll need this to reverse in order to see prices push higher that then catalyses a short-squeeze. Alongside this, the Coinbase Premium remains in positive territory, although it's decreasing and trending downwards - but still positive for now.

Coinbase Premium Still Positive, But Trending Lower

That Spot bid may come from the ETFs. In the last few weeks, we've begun to see a more stable Spot bid from this cohort with far less net outflow days. This is positive, but the market likely needs more.

Bitcoin ETF Flows:

Cryptonary's Take

Bitcoin is at an inflection point here. Price formed a bottoming base in the low-to-mid-$60k's with price now extending into the high $70ks. However, price has now reached key on-chain cost resistance levels (levels we have outlined in recent reports), and the Spot bid has slowed into this level. 

Alongside this, the stock indexes (S&P and Nasdaq) are both overbought on the daily timeframes, and they may be due for a correction. This comes at a crucial time as we're in the midst of corporate earning season - which has gone well so far, but with Big Tech reporting this week, the market will need that to be positive in order for it to continue moving higher in the short-term. 

Ultimately, Bitcoin is at a crucial level here. Currently, price action looks like a relief rally (a retest of key on-chain resistance levels) in a broader downtrend. Our expectation is that this is a relief rally, and should $80k-$83k be tested, we'd expect it to be the area where Bitcoin rejects from and continues its downtrend. We wouldn't be buyers of Bitcoin between $80k-$83k, and we'd view it as an area to de-risk instead. 

Key Dates Ahead:

• 29th April: Fed Meeting - 99% priced for no change.
• 29th-30th April: Big Tech Earnings - expectations are for positive earnings.
• 30th April: PCE data.

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.