After U.S. President Trump made relevant remarks, market concerns about the war in Iran have eased, and Bitcoin (BTC-USD) rose above $71,000 for the first time in four days. The native cryptocurrency rose as much as 3.1% on Tuesday, hitting $71,088, rallying in tandem with stocks while oil prices plunged. Bitcoin later gave up some of its gains and was trading around $70,878 in early New York trading. Markets reversed course from Monday after Trump said the conflict "will be over soon."
Other cryptocurrencies also rose in tandem. Ethereum, the world's second-largest digital asset, rose as much as 2.2%, while Ripple and Solana rose by 2.8% and 1.9% respectively. Later in the day, these coins gave up gains along with Bitcoin.
Richard Galvin, co-founder of the hedge fund DACM, said: "Trump's latest statement has been interpreted by the market as that the Iran conflict may end sooner than expected. But the risk is that the market may misinterpret Trump's remarks, or any one of Israel, the United States or Iran may take actions to further escalate the conflict, eliminating the option of easing the situation."
Trump sought to ease market anxiety over energy prices during a news conference at his Doral resort in Florida on Monday. He said the government was "working hard to bring down oil prices" and proposed possible exemptions from some oil-related sanctions and the possibility of the U.S. Navy escorting oil tankers through the Strait of Hormuz.
Stocks were sharply higher, with Europe's Stoxx 600 on track for its biggest daily gain since April and U.S. stock futures rising in tandem.
Brent crude, meanwhile, tumbled more than 7% to trade near $91 a barrel, well below Monday's peak of $119.50.
Since the US-Israeli air strikes on Iran on February 28, Bitcoin has shown relatively stable asset properties.
Pratik Kara, director of cryptocurrency research at Apollo, said: "Bitcoin has been very strong since the war broke out, and the $68,000 area is a strong support level. On the upside, we are focused on whether it can break through $73,000 strongly, and the next major resistance level is $87,000."
Bitcoin has even outperformed traditional inflation hedge gold so far this month. Bitcoin fell briefly when the strikes began (which coincided with a market shutdown), but has gained about 7% this month, while gold has fallen about 2% over the same period.
Bitcoin volatility has increased this week, however, with its 30-day Implied Volatility Index hitting a two-week high. Since a sharp sell-off last October, Bitcoin has struggled to post significant gains during brief rallies, with a lack of sustainability in price gains becoming the norm in recent months. Currently, its price is still down more than 40% from its October peak of over $126,000.
Traders continue to seek downside protection in the options market, with Bitcoin put options on the Deribit platform concentrated at the $60,000 strike price.