For a brief moment this week, sentiment in global markets improved.
Bitcoin surged on Tuesday, reaching a weekly high of nearly $72,700 after reports of a temporary ceasefire between the United States and Iran. The two-week truce eased fears of a wider conflict in the Middle East and raised hopes that shipping lanes through the Strait of Hormuz could remain open without disruption.
The reaction across financial markets was immediate. Bitcoin climbed almost 6 per cent in less than four hours, while global equities also strengthened as traders priced in lower energy risks and fewer potential supply chain disruptions.
Yet analysts warn that the optimism may be temporary and that the rally could rest on fragile foundations.
The $70,000 Resistance
Bitcoin has struggled to maintain momentum above the psychologically significant $70,000 level. The latest rally stalled near the $72,000 resistance zone before prices retreated. During the pullback, more than $150 million in bullish futures positions were liquidated within hours.
Market analysts say the current market situation reflects the highly leveraged nature of cryptocurrency trading.
Market strategist Julian Pineda, who analyses derivatives markets, has noted in his Bitcoin outlook that the $70,000 region has become an important psychological and technical level. His analysis suggests that heavy leveraged positioning and profit-taking around this zone often lead to rapid liquidations when sentiment shifts.
If Bitcoin falls below $70,000 again, traders believe the next support level could emerge around $64,000.
A Fragile Ceasefire
Geopolitical developments continue to influence investor sentiment.
US President Donald Trump recently suggested that Iran’s nuclear programme could potentially be deactivated in exchange for tariff and sanctions relief. Meanwhile, US Vice President JD Vance has described the ceasefire as fragile.
At the same time, Israel has launched a military operation known as Operation Eternal Darkness targeting underground infrastructure linked to Hezbollah in Lebanon. Israeli officials say the ceasefire with Iran does not apply to operations against Hezbollah.
Such developments highlight how quickly geopolitical tensions can return and affect financial markets.
Bitcoin’s Growing Link to Stock Markets
Another shift in recent years has been Bitcoin’s increasing correlation with traditional financial markets.
Analysts at Bloomberg Intelligence, including commodities strategist Mike McGlone, have repeatedly observed that Bitcoin now behaves more like a high-risk technology asset rather than a traditional safe-haven investment.
According to McGlone’s market analysis, Bitcoin’s price movements increasingly track broader equity market trends, particularly those linked to the S&P 500 index.
This relationship was visible during Tuesday’s rally, when both Bitcoin and global equities rose following news of the ceasefire.
Jonathan Borba/Pexels
Federal Reserve Policy Adds Pressure
Monetary policy remains another major factor influencing the cryptocurrency market.
Minutes from the March meeting of the Federal Reserve showed officials remain cautious about cutting interest rates. The central bank voted 11-1 to keep borrowing costs between 3.5 per cent and 3.75 per cent.
Higher interest rates generally reduce demand for speculative assets because borrowing becomes more expensive and safer investments such as bonds become more attractive.
Market expectations compiled by the FedWatch tool from CME Group currently indicate that investors expect a strong possibility that rates will remain unchanged at the next policy meeting.
Could Bitcoin Fall to Zero?
Despite Bitcoin’s strong price recovery in recent years, some economists remain deeply skeptical about its long-term value. Economist Steve Hanke has consistently argued that Bitcoin lacks intrinsic economic value because it does not generate income or cash flow like traditional assets.
Similarly, Nobel Prize-winning economist Eugene Fama, known for his work on market efficiency, has suggested that cryptocurrencies could theoretically collapse in value if they fail to function as stable mediums of exchange.
Economist Steve Keen, who predicted the 2008 financial crisis, has warned that Bitcoin could crash and its value could fall to $0. Explaining his stand, Keen argued that Bitcoin’s core design is its weakness, as it requires enormous amounts of energy.
“The reason I didn’t [buy Bitcoin] is they explained that the way that the public ledger is kept safe is that it takes too much energy to break it,” adding, “That means it’s got a huge requirement for energy use,” as quoted by CCN.
And when the global call to reduce energy consumption grows, cryptocurrencies will be one of the two targets to cut back on for policymakers, the other being international travel, Keen said.
Supporters of Bitcoin strongly disagree with these views. Many point to growing institutional adoption, exchange-traded funds and broader participation from large investors as evidence that the asset class is becoming more established.
A Market at a Crossroads
For now, Bitcoin appears to be at a crossroads. Geopolitical tensions, central bank policy and investor sentiment continue to shape the cryptocurrency’s direction. The recent rally demonstrates how quickly confidence can return when global tensions ease.
However, the history of cryptocurrency markets suggests that volatility will remain a defining feature of Bitcoin’s future.