Wintermute: Despite a brief rebound on Monday, the market remains fragile. Caution is advised.

On March 3rd, Wintermute released a market outlook stating that Iran’s geopolitical conflict has caused significant volatility in risk assets. For cryptocurrencies, the weekend decline absorbed the first wave of geopolitical panic, and the rebound was driven by the market believing Bitcoin has fallen 45% from its all-time high, with most losses already priced in. However, the impact of energy factors has been underestimated. Persistently high oil prices could keep inflation elevated, and central banks around the world initially hoped to cool inflation, which may further delay rate cuts in the U.S. Cryptocurrency is at a disadvantage in this game. Although ETF inflows have recently resumed, current trading activity shows institutional participation is significantly lower than the $85,000 to $95,000 trading range seen from November last year to September this year. Back then, institutional trading was more active, especially during price declines. Now, at current levels, buying interest is clearly lacking. The market appears very fragile. Lastly, altcoins continue to follow a typical bear market pattern, as positive returns are very short-lived, and investors lack the willingness to chase excess gains. Therefore, most altcoins are unlikely to see more sustained upward trends. Wintermute believes that although cryptocurrencies experienced a brief rebound on Monday, the market remains fragile with volatility rising again. With increasing risk premiums and the Federal Reserve unable to intervene, cryptocurrencies—being high-beta growth assets—continue to be under pressure. ETF outflows (though temporarily halted now) confirm this. This is the current reality. Wintermute advises investors to remain cautious. Market focus is mainly on conflict news, especially any progress in reopening the Strait of Hormuz or easing hostilities. If the conflict lasts longer than expected, rising energy costs could reshape interest rate expectations and put broad pressure on risk assets.