A 15-article peace plan conveyed by the USA to Iran through an intermediary marked an important development in the markets, which have been high for weeks. This plan, which stands out as the most concrete diplomatic step towards peace in the region since the end of February when the war began, is being watched carefully in the market. With the strengthening of the possibility of peace, there was activity especially in the cryptocurrency and commodity markets.
Price Fluctuations in the Cryptocurrency Market
Bitcoin traded at $71,019, up 0.9 percent on the day, and managed to stay above $70,000 for three consecutive days. However, since last week’s peak of $75,000, there has been a loss of 6.4 percent on a weekly basis. The rapid sales wave and liquidations experienced over the weekend negatively affected the weekly performance.
Ethereum showed the weakest performance on a weekly basis, despite gaining 1.7 percent in value. While XRP experienced a limited rise, its weekly loss exceeded 8 percent. Although Solana gained 2.5 percent, it fell on the weekly basis. Binance Coin, on the other hand, experienced a slight decline and increased its weekly losses. Tron was the only major cryptocurrency to increase on both a daily and weekly basis.
According to Alex Kuptsikevich, chief market analyst at FxPro, the fact that the leading cryptocurrency has remained above $70,000 despite not suddenly gaining upward momentum indicates that the market is strong and investor confidence remains.
Macroeconomic Effects and Fed’s Expectations
Following the news of the peace plan, the price of Brent oil suddenly dropped by 4.7 percent, falling below $100. Thus, it broke its course above $100 for the first time since mid-March. The decline in oil prices has also reduced the inflationary effect that has been putting pressure on risky assets for the last month.
While the US dollar lost value due to the developments in the region, there was a significant increase in Asian stock markets. The positive outlook also stood out in the US and European futures indices. The decline in oil prices made it easier for the US Federal Reserve to refrain from increasing interest rates, thus contributing to better liquidity conditions in the markets.
It is noteworthy that Bitcoin’s correlation with the S&P 500 in the last 90 days has remained high. However, it also stands out that this relationship was unbalanced from time to time during the war. While the price of bitcoin has remained almost constant since the war began, weekly losses for major altcoins have ranged from 4 to 9 percent.
The market has been trying to digest both the headlines of geopolitical tension, sudden sales waves and oil shocks for the last four weeks. So far, these developments have not led to a significant upward or downward break in prices.
Details about the 15-item plan have not yet been fully disclosed to the public. It is stated that the plan includes conditions for Iran not to possess nuclear weapons and not to enrich nuclear material. There appears to be very limited movement in ship traffic passing through the Straits.
