Whiplash

Macro

Last week captured the full range of outcomes this market is trying to price. The S&P 500 posted a 3.4% gain, its best week since November, but the path there was anything but clean.

Tuesday set the tone early. Iran's president signaled willingness to end the war if Tehran received security guarantees, the S&P 500 surged ~2.9% for its best session since May, and Brent pulled back from ~$111 to ~$105.

That lasted about 36 hours. Trump's Wednesday primetime address was the turn: war "nearing completion," but pledging to strike Iran "extremely hard" for another two to three weeks with no plan to reopen Hormuz. WTI surged 11% on Thursday to close above $111, Brent pushed back above $112, and Asian markets sold off hard (Nikkei -2.1%, Kospi -3.9%).

Friday brought an F-15 down inside Iran, a second U.S. combat plane crash near the Strait, and Iranian strikes on Gulf refineries. A 40-country virtual summit on Hormuz produced nothing. Sunday, Trump escalated with threats to bomb Iranian bridges and power plants on Tuesday if the Strait isn't reopened by 8 p.m. ET, then separately told Fox News there was a "good chance" for a deal by Monday. Axios reported a potential 45-day ceasefire framework under discussion.

This morning (Monday), Japan and Korea opened higher on the ceasefire report. Brent is at ~$110. The 10-year yield sits at 4.36%, up 40bp since the conflict began, with swaps pricing zero probability of a rate move at the April 28–29 FOMC. PCE data drops Thursday for the first clean read on whether the oil shock is feeding through to the Fed's preferred inflation gauge. OPEC+'s 206,000 bpd quota increase for May barely registers when Hormuz traffic remains 95% below pre-war levels.

Digital Assets

BTC finished the week as the laggard among major risk assets (+2.0% vs. ETH +4.2%, Nasdaq +4.0%), but its resilience at $67k stands out. The Fear & Greed Index is at 9, pinned in extreme fear for over a month, and social sentiment hit its most bearish ratio since the war started. Price and sentiment are telling completely different stories. BTC has spent five weeks absorbing war headlines, a $403 million liquidation event, and deeply negative on-chain demand without breaking the range it established on February 28.

The institutional bid explains why. ETFs absorbed ~50,000 BTC in March (strongest pace since October 2025), Strategy added 44,000 BTC, and Morgan Stanley received NYSE listing approval for a spot ETF at 14bp, opening 16,000 advisors to direct exposure. March flows totaled $1.32 billion net positive (with less intra-day flow volatility), ending a four-month outflow streak.

That said, while monthly flows printed positive, the more recent data is showing signs of institutional exhaustion. The final week of March flipped to $414 million in ETF outflows, the exchange whale ratio surged from 0.34 to 0.79 since January, and corporate treasury buying has slowed outside Strategy. Our proprietary OTC flows tell a similar story: institutions were buying and holding through the first three weeks of March, but that positioning has gradually shifted to neutral and is now tilting toward net selling as geopolitical tension persists. We're watching this closely, as institutional flow has been the sole pillar of BTC support since the war began.

ETH's +4.2% was the standout, with staking yield gaining traction as a differentiator in a higher-for-longer environment. From a technical perspective, it's also looks to have found some price support with price sitting below the 200-week MA, matching the longest stretch beneath it since the 2024 lag, though the 50d/200d MA spread has turned and appears to have bottomed and is trending back up.

SOL broke below $80 on the Drift Protocol exploit ($285 million, second-largest hack in Solana history). Altcoins were the only red on the cross-asset board (-0.3%) as capital continued concentrating in BTC and ETH at the expense of the long tail.

Our take:

“This is a headline-driven market with binary outcomes. Tuesday's deadline is yet another pivot.""

The cadence of geopolitical headlines is still intact: escalation over the weekend when markets are closed, supportive headlines into the Monday open. That said, the 45-day ceasefire framework is the most concrete de-escalation effort to emerge since the conflict began. If it materializes into even a partial agreement, the initial unwind of the oil risk premium could be sharp, but it has a ceiling.

Infrastructure damage to Iranian energy facilities, Gulf refineries, and Hormuz port logistics is already done. A full ceasefire doesn't restore pre-war shipping capacity overnight. Enough to ease the worst inflation fears and give BTC breathing room at the top of its range, not enough to fully clear the macro overhang.

The market is looking at a path of quiet reduction in strike tempo at a plausible scenario rather than a decisive resolution. That means continued headline volatility with a gradually improving baseline.

The bear case is straightforward. If Tuesday's "Power Plant Day" threat lands and Iran retaliates, the oil risk premium rebuilds immediately. Hormuz traffic at 95% below pre-war levels means there is no buffer, and bond vigilantes are already tightening conditions via the long end.

Taking a set back, the structural case for BTC and the wider industry is still strong. Deeper ETF infrastructure, 1.1 million BTC in corporate treasuries, Morgan Stanley's distribution channel opening.