Wintermute released a market report stating that as the Middle East conflict enters its second week, Brent crude oil surged 26% this week, with energy inflation pressures causing markets to reduce expectations for Fed rate cuts in 2026 to just one. Major risk assets declined broadly: S&P 500 -2.0%, Nasdaq -1.2%, Russell 2000 -4.0%, while gold also fell due to deleveraging. Cryptocurrencies emerged as the standout asset class this week, with BTC up 0.4%, ETH flat, and altcoins down 0.4%, showing signs of weakening correlation with equities. Wintermute analyzed that current crypto market leverage stands at approximately $60 billion—half its peak level—reducing forced selling pressure and contributing to its outperformance. Bitcoin’s resilience amid risk-off sentiment has also reignited discussions around its narrative as an inflation hedge. Next week’s FOMC meeting will be a key near-term catalyst; if the Fed signals a hawkish stance or tensions escalate further, it could weigh on markets.
Wintermute Report: Crypto Assets Outperform Amid Middle East Tensions
TechFlowShare
Summary
Value investing in crypto is gaining attention as the market demonstrates resilience. According to TechFlow, Wintermute’s report shows that during the second week of the Middle East conflict, Brent crude oil surged 26%, reducing expectations of Fed rate cuts in 2026 to just one. Major risk assets experienced broad declines: S&P 500 down 2.0%, Nasdaq down 1.2%, Russell 2000 down 4.0%. In contrast, crypto assets outperformed, with BTC up 0.4% and ETH flat. Wintermute noted that current crypto leverage stands at approximately $60 billion—half of its peak level. Reduced forced liquidation pressure and a favorable risk-to-reward ratio helped crypto stand out. Bitcoin’s performance amid risk-off sentiment has revived its narrative as an inflation hedge. The upcoming FOMC meeting remains a key catalyst, with a hawkish Fed or escalation of the conflict posing potential risks.
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