Author: Liu Jiaolian
Waking up, BTC is still hovering around 72k.
The news of an unexpected temporary ceasefire between the US and Iran spread across the globe, causing oil prices to drop, the stock market to rejoice, and Bitcoin (BTC) to follow with a rebound. Some rushed to chase the rise, while others seized the opportunity to close positions.
A true reflection of the human condition.
The old pals on Wall Street are not so excited. JPMorgan, UBS, and EIA almost echoed in unison, stating that the ceasefire is merely a calming message, and the crucial energy market route remains damaged [1].
This is the real issue the market will face next.
The overt battle has ceased, but the covert battle has just begun
Before the ceasefire, the market feared the closure of the Strait of Hormuz. This waterway carries a quarter of the world’s oil trade daily; if it were to be cut off, oil prices could soar to 150 dollars in no time, leading the entire world into a nightmare of stagflation.
Now the open battle has ceased. However, the real trouble may just be beginning.
JPMorgan bluntly stated that if the shipping lanes are blocked until mid-May, oil prices could soar back to 150 dollars [1]. UBS even more bluntly remarked that the infrastructure has been severely damaged, and it will take a long time to restore production to pre-conflict levels [1].
What does this mean? It means that geopolitical risks have shifted from visible missiles to invisible pipelines, insurance policies, and refinery utilization rates. These factors usually remain hidden, but at critical moments, they are key determinants of whether oil prices can truly decrease.
The probability of Trump being impeached on the prediction market Polymarket once surged to 64% [2]. Although the Republican Party controls both houses, the likelihood of a successful impeachment is low, but this number itself acts as a thermometer, showing that the market's nervous tension has never really eased.
Digital gold has not yet realized its dreams
Many hold the imagination that Bitcoin is digital gold, and it should rise in times of war.
This incident has clearly exposed the gap between this dream and reality.
Chronologically, it is clear that on the day the conflict escalated, oil prices soared while Bitcoin dipped to 66k. When the ceasefire news broke, oil prices fell, and Bitcoin quickly rebounded along with the US stock market [1][2]. This rhythm is almost indistinguishable from the movements of Apple and Tesla.
The true transmission chain of Bitcoin's volatility is as follows: War leads to rising oil prices, which indicates inflation is coming, and when inflation arrives, the Federal Reserve dares not cut interest rates. If the Federal Reserve does not cut rates, all risk assets will drop, and Bitcoin will fall as well. Conversely, a ceasefire leads to falling oil prices, reducing inflation pressure, reigniting hopes of rate cuts, leading to the rise of risk assets, including Bitcoin.
This chain is completely different from the safe-haven logic of gold.
Goldman Sachs had already raised the probability of a recession in the US to 30% before the conflict [2]. IMF's Kristalina Georgieva was even more direct, stating that even if this issue is resolved quickly, it will leave behind a legacy of slowed growth and rising inflation [1].
In this broader context, Bitcoin seems like a tech stock dressed in cryptocurrency garb. Its relationship with the Nasdaq is much closer than its relationship with gold.
Jiaolian is not saying that Bitcoin will never become digital gold. On the contrary, Jiaolian believes this day will come eventually. But that is a future matter, not today's reality. Today's Bitcoin is still on a growth path, and the first hurdle it must overcome is that of risk assets. Treating the future as the present will lead to significant losses in the market.
Reopening and normalization are two different matters
Currently, the market is pricing in reopening, good news that ships can pass through the shipping lanes.
But Wall Street is worried about the inability to normalize. Ships can pass, but insurance fees have risen, routes are congested, and there are various visible and hidden risks.
These two matters harbor Bitcoin's greatest invisible risks.
The Dallas Fed has made an estimation that if the shipping lanes remain blocked for a quarter, the average price of WTI crude oil would be 98 dollars, dragging down global economic growth by nearly 3 percentage points. If it lasts for two quarters, prices will rise to 115 dollars in the third quarter, and after three quarters, it could directly reach 132 dollars by year-end [1].
These numbers might seem distant for the average person; put differently, when US gasoline and diesel prices soar, each family will need to pay an extra several dozen to a hundred dollars a month for fuel, leading to price increases in supermarkets and rising costs for businesses. There is no need to wait for the Federal Reserve to take action; the market will tighten itself [1].
Morgan Stanley calculated that a 10% increase in oil prices due to supply shocks would push the US CPI up by 0.35% within three months, leading to a continuing slump in consumer willingness over the next half-year [1].
Three possible scenarios, one common sense
The worst-case scenario is that the ceasefire is fake, or shipping lanes are blocked until after mid-May. Oil prices could return to 150 dollars, inflation expectations could explode again, the Federal Reserve would be cautious, and Bitcoin would face the most direct downward pressure. During the last panic, the options market's buy orders concentrated around the 60k to 50k range [1][2].
The middle situation is that ships can pass but not smoothly. This is currently the most likely direction. Oil prices decline from high levels but remain considerably higher than normal. Inflation gradually cools down, the Federal Reserve may breathe a little easier but hesitates to act decisively. Bitcoin would fare slightly better, but it would still feel like there's a ceiling over it, as upward movements remain pressured.
The best scenario is that there is a genuine ceasefire, and ships can pass freely, completely restoring energy flows. Brent crude could fall to around 70 dollars, as before the conflict began, there was actually a surplus of global oil. Inflation could quickly cool down, hopes of rate cuts would return, and Bitcoin would strengthen alongside US stocks [1].
How the situation will unfold is naturally weighed differently by everyone.
Meanwhile, EIA has already made it clear that even if the war ends, full recovery will take several months [1].
Three major tests
First, can oil prices stay below 100 dollars? As long as oil prices remain here, inflation will not spiral out of control, and there will be room for the Federal Reserve to discuss rate cuts. If oil prices rise above 110 dollars, recession risks will spike sharply [2].
Second, what is the Federal Reserve's stance? UBS has already pushed back expectations for rate cuts, and the market fears that if inflation does not come down, the Federal Reserve could remain inactive for a long time [1]. As long as there is still hope for rate cuts, the valuations of risk assets will have support.
Third, can the ceasefire truly lead to peace? In the week of early April, just because of the easing situation, global equity funds saw inflows of over 15 billion dollars [2]. If this ceasefire can hold, such money will keep coming in. If the ceasefire breaks down, this money will flee faster than it arrived.
The impeachment probabilities in prediction markets can serve as an interesting political thermometer, but they are not a direct driving force for Bitcoin [2]. Oil prices, US Treasury yields, and Federal Reserve movements are the decisive factors.
Respect the power of cycles
2026 is set to be a bear market year in Bitcoin's four-year cycle. This pattern has not changed since its inception.
In bear market years, positive news always has limited effects, while negative news is amplified by fear. Today’s ceasefire rebound, tomorrow’s inflation data drop, the day after tomorrow’s ETF inflow—these events can create huge waves in a bull market, but in a bear market, they are merely small ripples in a pond.
Jiaolian does not advocate closing one's eyes and ears. Instead, it is important to distinguish between noise and signal.
Short-term geopolitical news, probabilities in prediction markets, and day-to-day price fluctuations are all noise. The signals truly worth paying attention to are whether the energy market can normalize, the Federal Reserve's interest rate path, and which step the four-year cycle has reached.
Excessive focus on the short term only wastes energy.
Believe in the long term.
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