In recent weeks, the crypto market has responded markedly negatively to geopolitical tensions before rebounding almost fully, as seen again this past weekend.

We believe the tensions between Israel and Iran are calming down, and we anticipate the market will soon agree. As the market adjusts, we simultaneously expect an end to tax season effects, improving USD liquidity, while other technicalities such as the repo market will arguably likewise improve liquidity. Moreover, many crypto traders have recently taken short positions, as shown in Chart 1, and are likely to switch to long if the market shows strong signs of recovery, further boosting the upward momentum.

Overall, we see more signs that the market will trend upwards in the coming weeks.