Crypto Fundamental Analysis: Middle East truce sparks a sharp rebound in confidence

As the second week of April comes to an end, the most relevant event shaping the crypto market has been the de-escalation of the Middle East conflict, which has allowed short-term confidence to recover quickly and has reignited demand for risk assets such as cryptocurrencies.

In addition, the weakness in some safe-haven assets has supported a rebound in crypto prices, and as long as this dynamic continues, buying pressure could remain relevant in the short term.

The truce eases market pressure

The trading week was marked by a key geopolitical event: a two-week truce and ceasefire between the United States and Iran, which helped avoid a broader escalation of the conflict. This was accompanied by a temporary reopening of the Strait of Hormuz and the possibility of initiating more formal negotiations in the near term.

Although this does not fully resolve the geopolitical situation, it does represent a shift from confrontation toward negotiation.

The reduction in uncertainty has had a direct impact on demand for safe-haven assets such as the U.S. dollar, which had been one of the most sought-after assets in recent weeks. This demand has now started to weaken, as reflected in the DXY index, which has declined from levels above 100 points to around 98.7, indicating a loss of strength in dollar demand.

Source: TradingEconomics

This shift has allowed risk markets, including cryptocurrencies, to regain ground. This is evident in indicators such as BTC Open Interest, which measures total open positions in the market and has increased significantly to around $24.2 billion, after starting the month below $21 billion.

This rise in open positions, combined with the recent price recovery, suggests that buy-side positioning is gaining traction, reflecting increased market activity and a more consistent demand for cryptocurrencies in the short term.

Source: Cryptoquant

Taking all of this into account, the easing of the conflict has weakened safe-haven demand and allowed crypto markets to strengthen. If network activity continues to grow, buying pressure could remain in place, although this will depend on whether geopolitical stability holds and avoids a return of the risk-off sentiment seen in previous weeks.

 

Bitcoin vs. other markets

In this context, Bitcoin has started to show a recovery in its correlation with equity markets such as the S&P 500. The correlation coefficient has moved from negative territory toward levels closer to 0, suggesting that the positive relationship between both markets is beginning to re-establish itself in the short term. It is important to note that correlation levels can change over time.

Source: Data – TVC, StoneX, Tradingview

This suggests that positive movements across risk markets are beginning to align once again, reflecting an environment where risk appetite is becoming relevant again. In this scenario, the strength observed in equity markets may also be supporting Bitcoin’s performance.

If this correlation holds, the crypto market could benefit from capital flows into risk assets, supporting a more consistent demand environment in the short term and potentially reinforcing buying pressure across cryptocurrencies in the coming sessions.

 

Confidence finally begins to recover

After several weeks in negative territory, the crypto Fear and Greed Index has shown a notable recovery, now hovering around 49 points and moving out of the “fear” zone toward a more neutral environment.

Source: Coinmarketcap

This shift suggests that market confidence has started to stabilize, leaving behind the broad risk-off sentiment that dominated previous weeks.

In this context, the improvement in confidence indicators points to the possibility that demand could begin to stabilize in the short term. If this trend continues, buying pressure could remain relevant across the crypto market in the coming sessions.

 

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25