Is Iran and the U.S. close to reaching a temporary agreement? How do the three phased ceasefires affect cryptocurrency and oil price trends

Since May 2026, the geopolitical situation in the Middle East has simultaneously sent two very different signals in two directions.

On one hand, multiple sources and officials have disclosed to media outlets like Reuters that the US and Iran may be close to reaching a temporary agreement, with a framework divided into three phases—first officially ending military confrontation, then resolving the Strait of Hormuz crisis, and finally opening a 30-day negotiation window to seek a broader comprehensive agreement. According to a draft memorandum leaked by the US side, which includes 14 clauses, it covers core issues such as Iran suspending uranium enrichment activities, the US promising to lift some sanctions and unfreeze Iranian assets.

On the other hand, the situation in southern Iran remains tense. On May 6, suspected explosions were heard near Kish Island. Iran’s initial response attributed it to a collision between a small aircraft and reconnaissance drones. But by May 7, multiple explosions were again reported near Kish Island and the port of Abadan. Iran’s Fars News Agency reported an attack on Bakhman Wharf at Kish Island, with some Iranian media pointing fingers at “hostile actions” by the UAE, while others said the explosions came from air defense systems intercepting drones.

On one timeline, the US claims to be close to a ceasefire, with Trump himself stating that “an agreement is very likely”; on another timeline, reports of live-fire explosions continue from southern Iran. This is not a classic “ceasefire,” but a tug-of-war—text negotiations are progressing at the table, while on the ground, military actions still continue.

Why are oil prices falling sharply amid “ceasefire expectations”?

The crude oil market is signaling what appears to be an illogical but clear pattern.

On May 6, Brent crude futures plummeted about 6% to around $103 per barrel, then further dropped to about $98, briefly falling below the $100 mark for the first time since April 22. On the same day, WTI crude futures closed at $96.21 per barrel, down 6.3%. Both major benchmarks broke the $100 threshold simultaneously, marking the most intense risk premium retreat since the Middle East conflict escalated.

The immediate catalyst was the news that the US and Iran were close to reaching a temporary agreement. Since the conflict erupted in late February, restrictions on the Strait of Hormuz and military standoffs had driven a large geopolitical risk premium into oil prices. When ceasefire expectations emerged, this premium was quickly re-priced by the market. Goldman Sachs previously estimated that daily oil supply losses in the Persian Gulf region amounted to about 14.5 million barrels, with global inventories being depleted at a rate of 11 to 12 million barrels per day; once a ceasefire is implemented, the reversal of supply-demand logic will directly impact prices.

The decline in oil prices itself is not the final conclusion. The more critical issue revealed is that geopolitical risk premiums are shifting from the oil market outward. The destination of this premium transfer extends to a market-tested asset class—cryptocurrencies.

What changes are happening in how cryptocurrencies respond to geopolitical events?

The relationship between Bitcoin and geopolitical risk has evolved through three stages in recent years.

Stage one (2024 to early 2025): macro liquidity dominated the market, with Bitcoin’s correlation coefficient with the Nasdaq remaining high at 0.6 to 0.8. Bitcoin was mainly treated as a risk asset, declining in tandem with tech stocks during geopolitical shocks.
Stage two (mid-2025 to early 2026): Middle Eastern conflicts escalated from localized friction to regional confrontation. Bitcoin began to show asymmetric reactions—its declines during rising geopolitical risk were smaller than tech stocks, and its gains during ceasefire expectations were larger.
Stage three (since March 2026): the conflict entered a high-intensity normalized phase, with the 20-day rolling correlation between Bitcoin and Nasdaq dropping to about 0.34, a near-one-year low.

This shift is driven by three overlapping factors. First, the supply rigidity of Bitcoin post-halving is gradually manifesting, with only about 450 new coins added daily, making marginal pricing sensitive to increased geopolitical safe-haven demand. Second, long-term holder addresses now account for about 68%, while short-term trading funds have decreased, reducing the price’s sensitivity to macro liquidity fluctuations. Third—and most critically—the market is beginning to incorporate Bitcoin into a geopolitical hedging framework, intersecting with gold’s pricing logic, with the correlation coefficient during conflict escalation rising from 0.31 to 0.67.

In other words, Bitcoin’s response to geopolitical events has shifted from “tracking risk assets downward” to “partially independently priced.”

How is the market pricing the US-Iran situation?

Every turning point in the US-Iran situation leaves traceable signals in the crypto market.

Take early May 2026 as an example: as ceasefire expectations increased, Bitcoin surged rapidly to over $81,000, reaching the highest level since January. Meanwhile, US spot Bitcoin ETFs saw a total net inflow of $2.44 billion in April, the strongest monthly figure since October 2025; on May 1 alone, net inflows reached $630 million, with BlackRock’s IBIT taking in $284 million and Fidelity’s FBTC close behind with $213 million; on May 4, ETF inflows again totaled $532 million. Continuous institutional inflows, combined with signals of easing US-Iran tensions, jointly pushed prices through key resistance levels.

But market pricing is never one-way. Shortly after Bitcoin hit $81,000, Iran’s Fars News Agency reported that a missile hit a US military ship, causing Bitcoin to plunge from about $80,594 to around $79,000 within minutes, while oil prices surged about 5%. Although the US later denied the report, the price quickly recovered. This volatility demonstrates that the crypto market’s “relative insensitivity” to geopolitical agreements is conditional—if real conflict escalates, risk re-pricing could be very intense.

Conversely, by May 8, the crypto market experienced a collective correction, with Bitcoin falling below $80,000, dropping over 2% in 24 hours, currently hovering around $80,200. This correction reflects both macro expectations of delayed rate cuts and the anticipation that “once an agreement is truly implemented, geopolitical premiums may further diminish.” The market is digesting both possibilities simultaneously.

What potential paths could continue to influence the crypto market?

The future evolution of the US-Iran situation will be a key medium-term variable affecting crypto volatility.

Path one: formal signing of a temporary agreement

If the three-phase framework takes effect in the coming weeks, with ceasefire implemented and the 30-day negotiation window initiated, short-term geopolitical risk premiums will further exit traditional safe assets like oil and gold. For cryptocurrencies, this could have dual effects: on one hand, risk appetite may rise, attracting incremental capital; on the other hand, if Bitcoin’s “digital gold” narrative is weakened—i.e., the market’s valuation of Bitcoin as a safe haven diminishes—some of the geopolitical hedge funds may withdraw. Whether ETF inflows in the first half of the year can offset this outflow will be a key factor in the medium-term trend.

Path two: negotiation breakdown or conflict escalation

The current “near-agreement” status does not guarantee final approval by both sides. US President has publicly stated that Iran’s 14-point proposal is “unacceptable,” ruling out the possibility of renewed military action. Iran insists that uranium enrichment rights and full sanctions removal are red lines that cannot be negotiated. If negotiations fail to start or the draft agreement is vetoed by one side, the previously priced-in geopolitical risk premium will rapidly re-enter the market. At that point, Bitcoin’s true safe-haven attributes will face a critical test—whether it can effectively hedge downside risks of equities like gold and the Swiss franc during geopolitical shocks will directly influence the long-term credibility of the “digital gold” narrative.

Path three: agreement reached but implementation hindered

Since the first phase of the agreement only involves ending direct conflict, core disagreements over nuclear issues, missile programs, and regional proxies are deferred. This means that even after the memorandum is signed, the game over issues like Strait of Hormuz transit rights and sanctions relief will continue to be contested. In this “fragile ceasefire” scenario, geopolitical risk premiums will not fully disappear but will be repeatedly discounted and re-priced at higher volatility levels. The crypto market will need to adapt to a new normal: every negotiation progress and explosion could trigger equally large swings.

What does the divergence between oil prices and Bitcoin reveal about new flows of geopolitical risk?

The sharp decline in oil prices this week, combined with Bitcoin’s prior price rally and the collective correction on May 7, points to a common trend: geopolitical risk premiums are shifting from traditional energy markets to digital assets. But this transfer is not linear; it is repeatedly re-priced based on news flow.

In oil markets, despite no significant reduction in conflict intensity, reactions are “dampening”—from sharp volatility triggered by each conflict message to a gradual differentiation of threat levels and pricing. An institutional strategist noted that even if an agreement is reached, supply recovery will be delayed, as time is needed for re-scheduling stranded tankers and reassessing insurance risks. This means short-term supply constraints will not immediately vanish upon signing.

In crypto markets, the $2.44 billion net inflow into US spot Bitcoin ETFs in April indicates structural demand from institutional allocators. But whether this demand can be sustained amid geopolitical turbulence depends on two core factors: first, whether Bitcoin’s actual decoupling from tech stocks can be maintained over longer periods; second, whether ETF inflows can remain stable without relying on geopolitical news.

From a broader macro perspective, global capital reallocation is underway. If cryptocurrencies can demonstrate a sustained ability to hedge geopolitical and equity risks over long-term time series, Bitcoin’s current pricing of the US-Iran event could become a structural component of global asset allocation, rather than just short-term trading speculation.

Summary

The US-Iran situation currently presents a complex “talking and fighting” pattern: a three-phase temporary agreement draft has been leaked, but the US’s core demands—nuclear issues, missile plans—are all deferred; meanwhile, explosions continue to occur in southern Iran, and the game over on the implementation level is far from over. The ceasefire expectation has caused oil to fall over 6% this week, with Brent dropping below $100, and risk premiums retreating rapidly.

But the crypto market’s response is more nuanced—April saw $2.44 billion in ETF inflows, with Bitcoin briefly surpassing $82,000, only to retrace to around $79,200 amid macro pressures and profit-taking. The correlation between Bitcoin and Nasdaq has fallen to about 0.34, indicating a shift from “risk asset” to “geopolitical hedge tool.” However, all current pricing is based on the fragile assumption that an agreement is close—if negotiations break down or conflict escalates again, Bitcoin’s true safe-haven role will face a critical test.

FAQ

Q: What are the specific contents of the US-Iran three-phase temporary agreement?

The first phase involves officially ending military confrontation, the second phase addresses the Strait of Hormuz transit issues, and the third phase initiates a 30-day negotiation window to reach a broader comprehensive deal. The draft is a one-page short-term memorandum, with US demands such as suspending uranium enrichment, limiting missile programs, and halting support for “regional proxies,” none of which are included in the agreement text.

Q: Why do oil prices fall sharply amid ceasefire expectations?

Ceasefire expectations imply the Strait of Hormuz may reopen, Iran’s oil exports could be unblocked, and global oil supply could surge. The risk premium of about $15–20 per barrel previously embedded due to geopolitical conflict is quickly squeezed out, causing Brent to fall below $100.

Q: How does Bitcoin’s response to geopolitical events differ from gold’s?

Bitcoin’s correlation with Nasdaq has dropped to 0.34, showing a shift from risk assets to geopolitical safe-haven narratives. During escalations, Bitcoin’s declines are smaller than tech stocks; during ceasefire expectations, its gains are larger. But gold’s safe-haven properties have been validated over decades, while Bitcoin’s “digital gold” narrative is still under testing. Academic research confirms Bitcoin’s effectiveness as a geopolitical hedge, but this has yet to be validated over long cycles.

Q: What is the most likely variable to influence the crypto market moving forward?

The most critical variables are whether the temporary agreement can be formally confirmed within a 48-hour window and whether the 30-day negotiation can be smoothly initiated. If the agreement fails, risk premiums will reprice rapidly; if it succeeds, the key is whether ETF inflows can offset some geopolitical hedge outflows and whether Bitcoin can benefit from both safe-haven demand and risk appetite recovery.