(Bloomberg) — Bitcoin rose to the highest level since early February after a flurry of comments from the US and Iran sparked optimism that the conflict in the Middle East may be heading toward a resolution.
The original cryptocurrency broke through the higher bound of the narrow range its been trading in since the war broke out in late February, topping $78,000 for the first time since Feb. 3. Bitcoin rose as much as 4.1% to $78,343, before paring the increase.
Other digital assets also pushed higher, with Either strengthening 3.3% and XRP increasing 2.4% as part of a broader risk-on rally. Equities climbed after Iran announced that the Strait of Hormuz is now “completely open” for commercial traffic, prompting traders to take on more risk. Oil and the dollar tumbled.
“The reopening of the Strait of Hormuz is the risk-on signal the global markets have been waiting for,” said Matt Mena, senior crypto research strategist at 21shares. “By removing one of the most significant geopolitical choke points in the world, Iran has effectively uncorked a massive wave of liquidity and investor confidence.”
Still, the derivatives market show traders remain largely defensive. Funding rates for perpetual futures contracts, a key measure of whether leveraged traders are betting on higher or lower prices, were negative. Hefty premiums are also being paid for put options providing downside protections at $60,000 and $50,000, respectively.
“Reality is that the market needs Hormuz clarity and sustained institutional buying to break this range with conviction. Until then, the direction remains unclear., said Jasper De Maere, OTC trader at crypto market maker Wintermute “A sustained ceasefire screams bullish, but each week the Strait remains disrupted from today probably brings an exponentially worse outcome as shocks will start to ripple through supply chains and the global economy.”
At the same time, a growing number of catalysts are seen as emerging. Strategy Inc. has acquired $2.6 billion in Bitcoin in the past two weeks alone. Bohan Jiang, senior derivatives trader at FalconX, said that buying has helped to underpin the market.
Shares of Strategy jumped as much as 16% on Friday, the biggest one-day increase since Feb. 6. Other crypto-related stocks also rallied, with Coinbase Global Inc. gained as much as 8% and Galaxy Digital Inc. up more than 10%.
Earlier in the week, Charles Schwab announced plans this week to launch spot crypto trading this year and suggested clients could allocate as much as 8.8% of a portfolio to Bitcoin. Goldman Sachs Group Inc. also filed for a Bitcoin ETF, its first direct push into the crypto investment space. And last week Morgan Stanley became the first major bank to launch its own Bitcoin-tracking ETF.
–With assistance from Emily Nicolle.
More stories like this are available on bloomberg.com