Bybit, the world's second-largest cryptocurrency exchange, in partnership with analytics firm Block Scholes, has released a report detailing how a conditional two-week ceasefire between the United States and Iran has moderated bearish sentiment in crypto markets. The announcement of the ceasefire, which includes a provision for reopening the strategically vital Strait of Hormuz, provided immediate relief to risk assets, propelling Bitcoin back above the $70,000 level for the first time since late March.
The report, titled "Bybit x Block Scholes Crypto Derivatives Analytics," indicates that the rally was not merely a short squeeze. While approximately $56 million in short positions were liquidated on Bybit's Bitcoin perpetual contracts, open interest increased concurrently with the price rise. This suggests traders were actively establishing new long positions. Funding rates remained relatively stable, pointing to measured rather than aggressive risk-taking.
Han Tan, Chief Market Analyst at Bybit, offered a tempered perspective. "The US-Iran ceasefire has offered some relief for risk assets, including cryptos," Tan stated. "However, relief rallies across the risk complex have been limited by lingering doubts over a meaningful end to this Middle East conflict. The fragile ceasefire remains on shaky ground."
Tan emphasized significant downside risks persist. "Should this pause in the war shatter abruptly, risk assets are bound to give up much of their recent gains," he warned. He further noted that as long as the Strait of Hormuz remains effectively closed, a temporary halt to military strikes does little to meaningfully reduce inflation risks or alter the global monetary policy outlook.
Options market data reflects this cautious stance. While the premium for downside protection has narrowed, it has not flipped decisively bullish, indicating investors are adopting a wait-and-see approach. The report concludes that while crypto markets demonstrated resilience and led the initial relief rally, the sustainability of gains hinges on further geopolitical developments and their broader implications for inflation and central bank policies.
