Key takeaways:
President Trump’s Tuesday deadline to Iran creates a pivotal moment for Bitcoin as it continues to decouple from gold.
While a ceasefire could boost equities, Bitcoin’s $75,000 path depends on its role as a hedge against fiscal instability.
BTC may benefit from (no) US-Iran ceasefire
There is a high probability that US President Donald Trump’s Tuesday deadline to Iran could be the catalyst needed for a Bitcoin (BTC) rally above $75,000.
Should a deal fail to materialize, Bitcoin’s risk perception could strengthen due to its unique decentralized properties. Conversely, a positive outcome in negotiations would likely propel risk assets, including Bitcoin.
President Trump issued an ultimatum to Iran on Sunday, warning the nation would be “living in Hell” if the Strait of Hormuz is not reopened by Tuesday at 8:00 pm ET. However, CNBC reports that Trump has been “vacillating” between productive dialogue and the intensification of military action.
Senior Iranian officials reportedly stated the strait will remain blocked until Iran receives compensation for war damages.
These mixed signals failed to convince market participants on Monday, as US stock markets traded mostly flat. In contrast, Bitcoin jumped above $69,000 for the first time in over 10 days—a trend made more notable by gold prices holding near $4,650, down 17% from a $5,600 all-time high.
Bitcoin slowly catching up to gold
Traders are increasingly concerned that central banks will be forced to liquidate their gold reserves. The Turkish Central Bank reported sales of 50 tonnes of gold for the week ending March 20, the sharpest decline in over seven years.
According to Reuters, Turkey has also sold $26 billion in foreign currencies to stabilize markets since the US and Israel-Iran war broke out in late February. Similarly, Russian gold reserves measured in tons have dropped to their lowest levels in four years.
A ceasefire in Iran, even if temporary, would almost certainly bolster risk markets, though the implications for Bitcoin are less certain.
Traditional corporations remain heavily dependent on energy costs and global logistics. Therefore, any reduction in geopolitical risk is immediately reflected in equity prices.
However, a deal between the US and Iran would likely have a less direct impact on Bitcoin, as a resolution would likely strengthen the demand for US Treasuries.
Crude West Texas Oil (left) vs. US 5-year Treasury yield (right). Source: TradingView
Yields on the US 5-year Treasury note surged to 4% from 3.55% in late February, signaling that investors are demanding higher returns to hold those bonds. While part of this selling pressure stems from fears of sticky inflation driven by high oil prices, there is also the added burden on the US fiscal debt due to increased spending on military operations.
An eventual ceasefire and renewed confidence in the US Treasury reduces the necessity for alternative hedges and independent financial systems such as Bitcoin.
However, even if the Strait of Hormuz is reopened, Mohit Mirpuri, an equity fund manager at SGMC Capital, warned that “the damage to confidence and supply chains is already done — things don’t just snap back to normal.”
Related: Iran war bets turn prediction markets into real-time macro radar—Sygnum
Predicting that the Bitcoin price will rally 8% by Tuesday based solely on a potential resolution to the US and Israel-Iran war seems far-fetched. Investors are gradually adjusting to President Trump’s characteristic back-and-forth, especially when negotiations involve unreliable third parties.
Traders are unlikely to provide the benefit of the doubt in this instance, so sustainable bullish momentum for risk markets could take longer to materialize. Nevertheless, the case for a $75,000 Bitcoin rally remains possible in the event of a positive outcome by Tuesday.