In the Asian trading hours Thursday, Bitcoin surged to $74,935, representing a 0.7% increase over the past 24 hours and a notable 5.4% rise this week. This uptick coincided with the closure of U.S. equities at record highs, spurred by reports that the U.S. and Iran had reached an “in principle” agreement to extend negotiations beyond the imminent April 7 ceasefire expiration.
The S&P 500 and Nasdaq 100 both achieved all-time highs, with the S&P finishing up 0.8% and the Nasdaq gaining 1.4%. This marks a two-week rally that has been reinvigorating investor optimism since late March.
In the cryptocurrency sector, Ethereum showed strong momentum, climbing 8.1% this week to $2,360. This upward trend indicates its sustained outperformance compared to Bitcoin, which has garnered attention from traders and analysts alike. Other tokens also saw gains, with XRP up 3.6% to $1.41, dogecoin rising by 4.8% to $0.098, and solana increasing 2.2% to $85.
Despite the buoyant equity rally, other markets appeared less convinced. Long-end Treasury yields remained relatively stable, and gold prices held around $4,800. Additionally, Brent crude experienced a slight uptick to $95 amidst ongoing U.S. naval operations in the Strait of Hormuz, which remains largely closed.
Steve Sosnick, chief strategist at Interactive Brokers, commented on the equities market, suggesting that stock movements indicate a general assumption that the military conflict in the Persian Gulf might be nearing resolution. However, crypto derivatives desks seem to lack similar conviction. QCP Capital noted that Bitcoin’s rally appears to be driven mainly by spot trading rather than a broader risk-on sentiment.
Funding rates for Bitcoin perpetuals remain negative, and there has been a decrease in open interest, indicating that short sellers are still active and not capitulating to the recent price movements. Furthermore, front-end implied volatility remains subdued, with one-month volatility trading below three-month levels. The 30-day 25-delta risk reversals continue to show a preference for downside protection over potential upside opportunity, suggesting that options markets are adopting a more cautious stance despite an overall spot market rally.
QCP highlighted ongoing geopolitical concerns, pointing out that the divisions between Iran’s nuclear capabilities and U.S. expectations remain a significant risk. They emphasized that while current market enthusiasm may revolve around the ceasefire narrative, fundamental issues remain unresolved.
A noteworthy observation was the performance of Ethereum relative to Bitcoin. The ETH/BTC ratio saw a climb to around 0.0315, recovering from a February low of approximately 0.028 and indicating a persistent phase of Ethereum strength against Bitcoin after a lengthy period. On-chain metrics for Ethereum have also shown divergence from its price, with network transactions reaching a record 200.4 million in the first quarter and stablecoin supply peaking at $180 billion.
Traders are keenly watching for signals in upcoming sessions, particularly whether Ethereum can maintain its stability better than Bitcoin during any potential market declines. Such performance would suggest a genuine rotation into riskier assets, while a sharper downturn could imply that Ethereum’s recent gains were simply a reflection of Bitcoin’s movements. The upcoming negotiations regarding the U.S.-Iran framework will be pivotal, as market sentiment currently views the situation as more of a headline relief than a comprehensive resolution.
