BlockBeats report, March 3: Wintermute released a market outlook stating that geopolitical tensions in Iran have caused significant volatility in risk assets. For cryptocurrencies, the weekend decline absorbed the initial wave of geopolitical panic, while the rebound stemmed from the market’s view that Bitcoin, having fallen 45% from its all-time high, has largely priced in these losses. However, the impact of energy factors has been underestimated. Persistently high oil prices could keep inflation elevated, countering central banks’ hopes for cooling inflation and potentially further delaying U.S. interest rate cuts. Cryptocurrencies are at a disadvantage in this dynamic.
Despite the recent inflows into ETFs, current trading activity shows significantly lower institutional participation compared to the $85,000 to $95,000 trading range observed from November last year to September this year. Back then, institutional trading was more active, particularly during price declines. Now, at current levels, buying pressure is clearly insufficient, leaving the market highly vulnerable.
Finally, altcoins continue to follow the typical bear market pattern, as positive performance is extremely brief and investors lack the willingness to chase excess returns, making it unlikely that most altcoins will experience more sustained upward movements.
Wintermute believes that, despite a brief rebound in cryptocurrencies on Monday, the market remains fragile, with volatility resurging. Amid rising growth risk premiums and the Fed’s inability to intervene, cryptocurrencies, as high-beta growth assets, continue to face pressure. This is corroborated by ETF outflows—currently paused but previously ongoing. This is the recent reality.
Wintermute advises investors to proceed with caution at this time. Market focus remains primarily on conflict-related news, particularly any developments regarding the reopening of the Strait of Hormuz or de-escalation of hostilities. If the conflict persists longer than expected, rising energy costs could reshape interest rate expectations and exert broad pressure on risk assets.