Bitcoin – How ceasefire hopes, oil prices are driving crypto market’s volatility

The crypto market is starting to price in the possibility of a ceasefire.

The Kobeissi Letter highlighted a key signal. U.S President Donald Trump recently posted on Truth Social that the U.S demands “unconditional surrender” from Iran, implying that any ceasefire could be delayed.

Looking at history, a similar statement by the President was followed six days later by an actual ceasefire. Based on this pattern, analysts are now speculating that a ceasefire could occur on 12 March this year.

However, this isn’t just a theory. Market data seemed to support this trend too. 

Recently, the crypto market saw significant inflows while oil prices surged sharply. In fact, U.S. oil is on track for its largest weekly gains on record since 1982, climbing by +34.5% this week alone.

From an economic perspective, these rising oil prices add long-term inflationary pressure. Combined with mounting war-related expenses, the resulting fiscal strain could increase the urgency for a ceasefire.

So far, risk assets have acted as a hedge. The bigger question now is – If the ceasefire holds, will crypto lose that hedge status, or could it instead become the catalyst for the “much-needed” market momentum?

Ceasefire uncertainty tests crypto’s hedge status

This week has been a textbook example of crypto volatility.

After nearly $150 billion flowed into the market during the first half of the week, inflows slowed down dramatically. We’re now set to close with only $50 billion, meaning 67% of the gains were wiped out in the second half.

The bigger story, however, lies in the macro context. Early inflows were largely driven by the Middle East conflict, which prompted investors to move capital into Bitcoin [BTC]. Notably, this reinforced its role as a hedge.

Now, momentum has weakened, leaving investors to question whether BTC can maintain that status or not. Additionally, the XAU/BTC ratio was up 6% intraday, recovering 50% of the losses it faced earlier this week. 

From a rotational perspective, capital may be shifting away from crypto and back into legacy assets. This raises another key question – Was BTC’s breakout past $70k truly a reflection of its hedge appeal, or was it just another fakeout?

Given the volatility this week, the move feels more like speculation than real momentum. In this context, a ceasefire would be a clear bullish signal for the market, potentially reigniting confidence in crypto as a hedge.

Conversely, what happens if the ceasefire doesn’t hold and oil prices keep climbing? Capital could rotate further into gold, increasing the risk of crypto losing its status and making it harder for BTC to push past $70k.

Final Summary

• BTC’s breakout past $70k was driven by conflict-driven demand, but weak momentum has been threatening its hedge status.
• A successful ceasefire could stabilize markets, while a failed ceasefire and rising oil prices may push capital into legacy assets.