The cryptocurrency market enters this week under uncertain conditions following its Friday rally.
The brief reopening of the Strait of Hormuz initially drove oil prices down, boosting risk assets like bitcoin and the broader crypto sphere. However, on Saturday, Iran resumed attacks on vessels attempting to navigate through, while the U.S. captured an Iranian-flagged tanker on Sunday.
As the ceasefire is due to conclude by mid-week, traders are keenly observing whether the positive momentum in risk-on investments can endure another energy disruption.
The critical technical level to monitor has been identified. According to Luke Nolan, senior ETH research associate at CoinShares, who spoke with CoinDesk, bitcoin’s ability to maintain its ETF cost basis near $74,000 is crucial.
“With the reopening of Hormuz leading to a decrease in oil prices and equities reaching new highs, cryptocurrencies have also seen an uptick,” stated Nolan. “The continuation of this trend now depends on BTC maintaining a position above its ETF cost basis (~$74k), which would confirm the risk-on shift evident in trading flows. Over the last three days, ETF inflows have turned positive, and an acceleration in this trend could support further increases.”
If bitcoin can sustain a level above $74,000 until the ceasefire ends and continue to experience four consecutive sessions of positive ETF inflows, it would affirm the market rotation hypothesis. Conversely, falling below that threshold could reintroduce volatility into the sector.