Wintermute: If the conflict continues, cryptocurrencies and other risk assets may remain under pressure

According to the market analysis report released by Wintermute, the military strikes by the United States and Israel against Iran have triggered a risk-averse sentiment in the market, causing the price of Bitcoin to drop to $63,000 before rebounding to around $67,000. The military operation, code-named "Epic Fury," began last Saturday evening, targeting Iranian military facilities and reportedly resulting in the deaths of Iran's supreme leader and senior officials. The conflict has lasted for three days, with the Strait of Hormuz effectively closed and airspace in the Gulf region shut down, showing an escalation rather than a de-escalation of tensions.

Macroeconomic pressures are mounting: oil prices surged by 9%, briefly surpassing $80; analysts have raised their Brent crude oil forecast to $100; gold prices approached $5,400, adding about $1 trillion in market value within hours; the stock market opened significantly lower, with the Dow Jones Industrial Average dropping over 500 points at one point; the VIX fear index reached its highest level since 2026.

In the cryptocurrency market, despite over $1 billion in inflows into ETFs last week, ending five consecutive weeks of outflows, there has still been a net outflow of about $4.5 billion year-to-date, and institutional over-the-counter trading activity remains notably sluggish. The volatility indicator DVOL surged from the 30-40 range to about 55, with the options market anticipating a daily volatility of 2.5-3%. Wintermute's analysis suggests that if the conflict continues and keeps energy prices high, it could maintain elevated inflation levels and delay the Federal Reserve's interest rate cuts, thereby exerting broader pressure on risk assets such as cryptocurrencies.

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