Wintermute: If the conflict persists, cryptocurrencies and other risk assets may continue to be under pressure

Mars Finance reports that according to a market analysis by Wintermute, the US and Israel’s military strikes on Iran have triggered a risk-off sentiment in the market. Bitcoin briefly fell to $63,000 before rebounding to around $67,000. The military operation codenamed “Epic Fury” began last Saturday night targeting Iranian military facilities, reportedly resulting in the deaths of Iran’s top leaders and senior officials. The conflict has lasted three days, with the Strait of Hormuz effectively closed and airspace over the Gulf region shut down, indicating an escalation rather than de-escalation.

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

In the crypto market, despite over $1 billion in ETF inflows last week ending five weeks of outflows, there has been a net outflow of about $4.5 billion since the beginning of the year, and institutional OTC trading activity remains notably subdued. The volatility indicator DVOL surged from the 30-40 range to around 55, with options market expected daily volatility at 2.5-3%. Wintermute’s analysis suggests that if the conflict persists and energy prices remain high, inflation could stay elevated, delaying Federal Reserve rate cuts, which would put broader pressure on risk assets like cryptocurrencies.