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▲ Bitcoin lost direction and fell into chaos/AI generated image ©
As the tension before the storm enveloped global asset markets, the cryptocurrency market, which had been rising relentlessly, took a breather along with the New York stock market, as Middle East peace negotiations shrouded in uncertainty and hawkish monetary policy concerns overlapped.
According to data from global cryptocurrency market aggregator CoinMarketCap as of 6:17 AM on the 22nd, Bitcoin (BTC) is trading at $75,595, down 0.59% from 24 hours ago, showing a slight decline. Ethereum (ETH), the leading altcoin, also recorded a 0.56% decrease to $2,313.63, while top market cap assets XRP (Ripple) and Solana (SOL) also fell by 0.34% to $1.42 and 0.64% to $85.28, respectively. The total cryptocurrency market capitalization decreased by 0.52% to approximately $2.55 trillion, and the Fear & Greed Index recorded 55, indicating a neutral investment sentiment.
This downward pressure in the crypto market aligns with the overnight decline in the New York stock market. On the 21st (local time), the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all closed down, falling between 0.59% and 0.63%. The volatility index (VIX), also known as the 'fear index,' rose 3.34% from the previous trading session to 19.50, nearing 20, the benchmark for market instability. Despite strong first-quarter earnings from major companies, the impending end of the US-Iran ceasefire and the crisis facing the second round of peace talks led to extreme risk aversion among investors.
Although the ceasefire's expiration was imminent, negotiators from both countries had not even departed for Islamabad, Pakistan, the meeting venue, thus escalating war tensions. Following the US's seizure of an Iran-linked vessel and President Donald Trump's hawkish remarks threatening bombings if no agreement was reached, Brent crude surged to $98.48 and West Texas Intermediate crude to $89.67. Even after the market close, despite President Trump announcing a temporary halt to attacks and an extension of the ceasefire, citing Pakistan's mediation and internal divisions within Iran, Iran's notification of non-participation in the second round of talks kept deep market uncertainty unresolved.
Furthermore, hawkish statements from Kevin Warsh, a candidate for the US Federal Reserve (Fed) chairman, further heightened market caution. When he declared his commitment to upholding the central bank's independence despite presidential pressure for interest rate cuts, the yield on 10-year US Treasury bonds surged to 4.29%, and the 2-year yield to 3.78%. This rise in Treasury yields even caused spot gold prices to plummet by 3.0% to $4,677.24, exerting structural selling pressure across the entire cryptocurrency market, including non-interest-bearing Bitcoin.
For the time being, the fate of the cryptocurrency market is expected to be entirely dependent on whether a breakthrough is achieved in geopolitical risks shrouded in uncertainty and on the Fed's direction regarding interest rates. While there are positive views on fundamentals, with major financial institutions like JPMorgan Chase raising stock index targets to 7,600 based on strong performance in the AI and technology sectors, cryptocurrency investors should focus on thorough risk management rather than premature directional bets until the two major macroeconomic uncertainties—the fear of war and concerns over prolonged high interest rates—are resolved.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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