The U.S. and Iran paused strikes over the Strait of Hormuz, sending Brent crude from above $100 to around $87 a barrel and easing the inflation fears weighing on risk assets. Bitcoin sat near $65,200 while ether approached $2,000. Wednesday's Fed decision now stands between the market and a broader recovery.
Bitcoin traded slightly lower since midnight at $65,200 on Monday, holding ground it recovered after the U.S. and Iran paused strikes over the Strait of Hormuz. The pause sent Brent crude tumbling from above $100 to around $87 per barrel as mediators continued talks.
Oil's retreat lifts equities and crypto
The move carried across risk assets well beyond crypto. Nasdaq 100 and S&P 500 index futures rose 1.36% and 0.80%, while gold and silver both climbed as inflation fears unwound.
Ether outperformed bitcoin, rising 0.51% to $1,963 and approaching the psychologically significant $2,000 level for the first time since the beginning of June. The CoinDesk 20 Index gained 1.6% over 24 hours.
Iran's foreign ministry spokesperson Esmaeil Baghaei said talks with Oman on managing safe shipping traffic through the Strait had been positive and achieved some progress. However, he added that no change has yet occurred in traffic through the Strait.
Rate-hike odds slip before Wednesday's decision
The Fed meets this week and faces a decision on whether to raise interest rates for the first time in three years, with inflation running at 4.1% on the back of the oil surge spurred by the Iran war. Because hostilities paused, the odds of a hike have thinned.
Markets now price a 30.5% chance of a move on Wednesday, down from 37.4% at Friday's close, according to CME Group's FedWatch tool. About two-thirds of the market still expects policymakers to leave the target range at 3.50% to 3.75%.
Bears absorb the cost of the bounce
Short sellers paid for bitcoin's turnaround since Sunday, which lifted the spot price back above $64,000. Forced closures of bearish bets accounted for most of the 24-hour liquidation tally of $312 million.
Futures traders, however, do not appear to be fully participating, and open interest shows it. Positioning pulled back to 740K BTC from Friday's spike to over 760K BTC. Meanwhile, bitcoin's 30-day implied volatility index sits near 40%, just above its recent two-month low of around 38%.
DeFi tokens were Monday's standout winners, with AAVE surging 9% and LDO rising 9.4% over the past 24 hours. CoinMarketCap's Altcoin Season indicator has risen to 55/100, pointing to a market that is gradually improving in terms of sentiment.
Sources: CoinDesk, CryptoSlate, CoinGape
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