Last week’s call was clear: the beginning of the end. Ceasefire in place, equities at highs and BTC at USD 76,000. But we also flagged that the rates market refused to validate the move. That divergence continues to hold. The bond market saw what equities did not.
As with most things in this market, it was never going to be that simple.
Iran reversed its reopening of the Strait with the ceasefire collapsing under mutual accusations of breach. Crude rebounded and has not looked back. Everything the market spent two weeks pricing in was repriced in two days. Crypto added its own layer of damage – a USD 292 million Kelp DAO exploit, the largest DeFi hack of 2026, triggered a bank run across the staking ecosystem and forced a hard reset on risk assumptions the market had been comfortable ignoring.
We are not reversing our call. But the path is messier than the market priced last Friday.
Macro: Oil Pins the Fed
Despite the Lebanon–Israel ceasefire extension overnight, oil continues to hold its gains. The Iran talks impasse is adding to uncertainty and further threatening to delay the normalization of flows from the Persian Gulf. Brent is above USD 106, WTI trading around USD 96, and the US naval blockade in the Strait remains in place. Until that changes, the energy complex stays tight and everything downstream. Inflation, rates and risk appetite stay constrained.
That constraint was on full display in Washington this week. Kevin Warsh used his Senate testimony to talk process, not direction, leaning on the data without offering any forward steer. The market wanted a hint. It did not get one. Thursday’s PMI prints only reinforced the problem, coming in hot enough to push yields higher and shove the next cut further out. CME pricing now implies roughly 100% probability of a hold at next week’s FOMC and approximately 80% chance of no cut by year-end. The 10Y sits at 4.32%, DXY firm at 98.8. Energy-driven inflation argues for tighter conditions while the growth backdrop is clearly softening – neither side resolving quickly enough to give the Fed cover to move which will likely keep risk in check.
FOMC and US payrolls next week could break the deadlock. A dovish hold or a soft jobs print gives risk room. Hot data keeps the lid on.
Crypto: Capped at USD 80,000, But the Floor Keeps Rising
BTC tested USD 80,000 for the second time this week and got turned away, after the PMI dragged rate expectations hawkish. But the structure underneath is constructive. Price has been stairstepping higher without meaningful retracement, each dip finding a buyer sooner than the last. Funding is still negative and a clean break through USD 80,000 turns that positioning into forced demand.
It was not all constructive though. The Kelp DAO exploit was the other story markets did not need this week. Lazarus Group reportedly compromised a single-point-of-failure oracle bridge on LayerZero, drained 116,500 rsETH, and triggered contagion across Aave, SparkLend and Fluid. Over USD 6 billion in deposits were pulled as confidence in the staking ecosystem evaporated overnight. A single compromised verifier feeding fake cross-chain messages, and USD 292 million walked out the door.
RAVE rounded out a painful week. A 10,000% surge collapsed after ZachXBT investigation exposed a textbook pump-and-dump.
BTC continues to build a floor. Everything around it is making the case harder to trust.
Looking Ahead: Waiting for the Trigger
FOMC and US payrolls next week set the near-term tone. A dovish hold or a soft jobs print loosens the macro constraint and gives risk assets room. Hot data or hawkish guidance keeps everything pinned. On the geopolitical side, the ceasefire extension buys time but not much else. As we flagged last week, any meaningful deal is likely six months from ratification – leaving plenty of room for the narrative to reverse again. Until the Iran talks produce something concrete, oil stays elevated and the macro constraint holds.
For BTC, USD 80,000 remains the level to clear. We still see scope to test USD 85,000 sooner rather than later. That is where concentrated short interest sits and where a squeeze becomes self-reinforcing. The thesis has not changed. We are past peak uncertainty. But the market needs one of these catalysts to break in its favor to prove it.
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