MARKETS BET ON A DEAL DESPITE ESCALATING WAR
Markets entered the session expecting another wave of risk-off selling after the conflict in the Middle East intensified. Instead, investors chose to focus on the possibility of diplomacy, sending U.S. futures back into positive territory despite one of the biggest military escalations since the April ceasefire.
The U.S. struck around 90 Iranian military targets overnight, while Iran responded with missile and drone attacks targeting U.S. bases across Kuwait, Bahrain, Qatar, and Jordan. Yet after President Trump said Iran had reached out and “they want to make a deal,” equities recovered as traders once again priced in hopes of de-escalation.
THE MARKET IS CAUGHT BETWEEN TWO NARRATIVES
The military situation continues to deteriorate. For the second consecutive day, inbound non-Iranian VLCC traffic through the Oman shipping lane fell to zero, highlighting growing concerns around the Strait of Hormuz. At the same time, the U.S. Strategic Petroleum Reserve now sits just 19 million barrels above its estimated minimum operating level, leaving far less room to cushion a prolonged supply disruption than in previous oil shocks.
Despite that, stock futures are trading higher, with the S&P 500, Nasdaq, Dow, and Russell 2000 all in positive territory after Trump’s comments reignited hopes that negotiations could still prevent a broader regional conflict.
Right now, two very different markets are forming. Equities are pricing in diplomacy, while oil continues pricing in disruption. One of them will eventually have to be wrong.
OIL HOLDS NEAR ITS RECENT HIGHS
Crude remains one of the biggest beneficiaries of the geopolitical uncertainty. Even as equities recover, oil continues trading near its recent highs as traders keep pricing in the possibility of supply disruptions around the Strait of Hormuz.
Price recently tested the $75.8 resistance zone before pulling back slightly and is now consolidating around $74.5. Holding above the $71.8-$72 support keeps the bullish structure intact, while a breakout above $75.8 could open the door toward the $79-$80 resistance zone.
CRYPTO WATCH
Despite the renewed tensions in the Middle East, Bitcoin has remained resilient, suggesting buyers continue stepping in whenever volatility increases.
It has successfully defended the $61.6K-$61.8K support zone and has since reclaimed both its 25 and 50 moving averages. Price is now pushing toward the $63.8K resistance area after recovering from yesterday’s weakness.
A move above $63.8K would put the $64K-$64.1K resistance zone back in focus. As long as BTC continues holding above $61.6K, the broader recovery structure remains intact.
The latest liquidation heatmap shows Bitcoin trading between two major liquidity clusters.
A large concentration of short liquidity sits between $64K and $65K, meaning a breakout above resistance could trigger another short squeeze. At the same time, heavy long liquidity remains concentrated around $60.8K-$61.2K, making that area the key downside level if support fails.
Until one of these liquidity zones is taken, expect volatility to increase as Bitcoin trades between the two extremes.
SENTIMENT REMAINS IN FEAR
The Crypto Fear and Greed Index currently sits at 27 (Fear). While sentiment has improved slightly from yesterday, investors remain cautious amid the ongoing geopolitical uncertainty.
The encouraging sign is that the market has not returned to Extreme Fear despite the latest escalation, suggesting traders are becoming less reactive to headline-driven volatility.
Bitcoin Dominance has climbed to 58.3%, remaining close to its highest level of the year. Capital continues flowing into Bitcoin rather than the broader altcoin market, highlighting that investors still prefer more liquid assets during periods of uncertainty. While several altcoins are beginning to outperform, a broader altseason is yet to emerge.
SOL has stabilized after defending the $76.5 support area and has reclaimed its 25 moving average. Price is now testing the 50 MA near $80, which remains the first major resistance following the recent correction.
A move above the $80-$82.7 resistance zone would strengthen the bullish outlook, while failure to reclaim would shift attention back toward the $76.5 support.
ARB is one of today’s strongest performers after Robinhood Chain highlighted its revenue-sharing model with the Arbitrum ecosystem. Under the Arbitrum Expansion Program, 10% of protocol revenue flows back to the ecosystem, creating a meaningful long-term value accrual mechanism.
Technically, ARB has reclaimed both its 100 and 150 moving averages and is now approaching the $0.081-$0.083 resistance zone.
LIT also continues showing impressive relative strength. After successfully holding its 50 moving average, price is moving back toward the $2.51 resistance. A breakout could trigger another move toward the recent highs near $2.75.
APE remains one of the strongest charts. Price has reclaimed both key moving averages and is now challenging the next resistance near $0.19. Holding above $0.14 keeps the recovery structure intact.
OP is also beginning to recover. The token has reclaimed its 25 moving average and is attempting to establish support above the 50 MA. A move above $0.114 would strengthen the recovery and increase the probability of a push toward $0.135.
AI IS NOW OFFICIALLY AN INFLATION RISK
The latest FOMC minutes revealed another important development. Fed officials directly cited AI-related price pressures, alongside tariffs, as one of the reasons core goods inflation has remained elevated.
While policymakers believe AI could eventually improve productivity and reduce inflation, they also acknowledged that those benefits are likely years away. In the near term, higher demand for semiconductors, memory, electricity, and data center construction continues adding to inflationary pressures, reinforcing the higher-for-longer interest rate narrative.
SPACEX REMAINS UNDER PRESSURE
SPCX has now fallen roughly 36% over the last 22 days, wiping out approximately $1.05 trillion in market value.
The chart remains bearish after failing to reclaim the $164 resistance area. Price is attempting to stabilize near the $147-$150 support zone. Holding this level could trigger a relief rally toward $155-$158, while a break below support would likely extend the current downtrend.
WHAT TO WATCH
- Whether diplomatic headlines continue supporting equity markets despite the military escalation.
- Can crude oil break above the $75.8 resistance zone if tensions continue rising?
- Can Bitcoin reclaim the $63.8K-$64K resistance area and trigger a move toward the next liquidity cluster?
- Will Bitcoin dominance remain elevated, or will improving sentiment allow more capital to rotate into altcoins?
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