Peace talks fall into another deadlock, U.S. stocks retreat from highs, can Bitcoin hold the 80k level?

Peace Talks Hit Another Deadlock: Can US Stocks Pull Back from Recent Highs, and Can Bitcoin Hold the $80k Level?

By Rhythm Xiao Gong

Source:

Reposted from Mars Finance

The outlook for US-Iran peace talks once again plunges into chaos.

After Axios’ exclusive report the day before that “both sides are close to reaching an agreement,” the market briefly indulged in optimism. The S&P 500 hit an all-time high, and the Nasdaq simultaneously refreshed its record. On Wednesday, the S&P 500 jumped 1.46% to 7,365.12, while the Nasdaq surged 2.02% to 25,838.94—both touching new record closing highs.

That good mood didn’t last 24 hours.

An Iranian Foreign Ministry spokesperson on Wednesday said that Washington’s peace proposal “is still under review,” and that the core of the proposal—pausing uranium enrichment and reopening the Strait of Hormuz—remains unresolved on both key demands. Iran’s red line on uranium reserves remains unchanged. The bullish confidence built up the previous day was quickly drained by this news. Risk sentiment reversed immediately. All three major US stock indexes closed lower; the semiconductor sector led the declines, and smaller-cap stocks faced especially heavy pressure.

The core narrative: a peace agreement is still a long way off

The market’s interpretation of this conflict has become highly binary: either the talks succeed, or the fighting continues.

This week’s diplomatic timetable has created relatively large swings. On Monday, Trump announced the suspension of the “Project Freedom” escort mission. A Pakistani intermediary released positive signals. On Tuesday, Saudi media even predicted a breakthrough in the Strait of Hormuz “within hours,” sending oil prices tumbling—US oil was down more than 5% intraday at one point, and Brent fell to below $97.

But Iran then cooled the situation right away. The Iranian Foreign Ministry clearly stated that uranium enrichment is a red line, not a bargaining chip. In the same timeframe, the Islamic Revolutionary Guard Corps announced it would establish a new “control system” for the Strait of Hormuz, implying that even if passage is opened in the future, it would be a selective opening led by Iran rather than an unconditional restoration.

Meanwhile, the US Treasury announced additional sanctions on Iran-related oil networks that same day. Reports also said that the US military used force against an Iranian oil tanker violating the blockade in the strait. Economic pressure and military deterrence ran in parallel, indicating there were no signs the US government was letting go.

Polymarket data shows the probability of reaching a peace agreement before May 15 has fallen to 15%, and was 20% at the time of publication.

As a result, oil prices carved out a sharp V-shaped move.

Intraday, Brent futures briefly fell to $96.73, down more than 12%. As the peace-talk news gradually deteriorated, bulls re-entered; Brent closed near $100, while WTI settled around $90.5—both barely holding onto key whole-number levels.

Notably, spot Brent (the spot market) has already fallen below nearby month futures, signaling a reversal in the spot premium structure—suggesting that, in the current physical crude market, crude supplies are relatively ample, structurally diverging from the geopolitical risks priced into the futures market.

Outside the strait, US crude oil exports reached a record high last week. Global buyers are accelerating their shift toward US supplies to avoid Middle Eastern shipping risks.

Aldo Spanjer, head of energy strategy at BNP Paribas in France, directly abandoned trading in energy markets, saying: “The outcome is too binary—headlines alone can trigger stop-losses. This situation has happened five times this week, making it almost impossible to trade.” Scott Shelton, an energy analyst at TP ICAP, described the current situation as a “risk desert,” leaving only hedging positions in place.

Can Bitcoin Hold the $80k Level?

Now let’s look at Bitcoin, the asset most crypto participants care about.

Against this backdrop, Bitcoin remains under pressure. Bitcoin spot fell about 1.56% on the day, finding support around $80,000.

Unlike previous rounds of panic selling, this pullback looks relatively healthy in structure. On-chain data shows that the share of holdings by long-term holders rose to 78.3% of circulating supply. Exchange balances continued to fall, hitting a seven-year low. Over the past 30 days, whale addresses net bought about 270,000 BTC. BlackRock’s Bitcoin ETF holdings have risen to about $62 billion, and the structure of institutional holdings is tending to stabilize.

For Ethereum, overall sentiment this week benefited from heightened expectations that US crypto regulatory legislation will be implemented. Over the past five days, ETH gained about 5.6%, trading in a range of $2,360–$2,412, while maintaining a market cap of around $233 billion.

Worth noting: April this year was the strongest month for net inflows into US spot Bitcoin ETFs since October 2025. Net inflows reached $2.44 billion. Institutional channels are still opening further, which resonates with Bitcoin’s relative resilience amid macro volatility.

From a narrative logic standpoint, the impact of the Middle East situation on the crypto market is showing structural divergence. Surging oil prices and rising inflation expectations increase the probability of Fed rate hikes, putting pressure on Bitcoin. At the same time, some Middle East capital is accelerating transfers of assets into decentralized channels to hedge potential sanctions risks and constraints on liquidity in the banking system. On the same day the US Treasury added sanctions to Iran-related oil networks, on-chain data showed a slight disturbance in anonymous coin-mixing transaction activity. This is not a conclusion—just a signal worth monitoring.

On the crypto legislation front, market expectations that the US regulatory framework will land are also supporting sentiment. The stablecoin and digital asset market structure bills in both the US House and Senate are advancing. If implemented within the year, they would provide compliance support for institutions to expand allocations further.

US Stocks Oscillate at High Levels, Semiconductor Stocks Underperform

Thursday was the second trading day this week with unclear direction.

The S&P 500 closed down 0.38%, at 7,337.11 points. The Dow fell 313.62 points (-0.63%) to 49,596.97 points. The Nasdaq was relatively restrained, closing down only 0.13% at 25,806.20 points. The Russell 2000 small-cap index dropped 1.63%, the biggest decline among the major indexes that day.

All sectors closed lower. Energy posted the heaviest losses, while consumer staples held up relatively better.

There was clear differentiation within the tech sector. Tesla rose 3.28%, Nvidia gained 1.76%, Microsoft increased 1.68%, and Meta rose 0.64%. Apple fell 0.03%, Alphabet fell 0.01%, and Amazon dropped 1.39%. The aggregate of the “Magnificent Seven” index overall inched up 0.69%, one of the few bright spots on the day.

Semiconductors were the worst-hit area. The Philadelphia Semiconductor Index fell 2.72%. AMD dropped 3.07%, and TSMC ADR fell 1.28%. Better-than-expected earnings from Qualcomm and Fortinet, along with Datadog’s analyst day, provided some support to the software sector. The software index may be on track for a fourth consecutive week of gains, but that couldn’t cover up the semiconductor sector’s systemic sell-off.

Goldman Sachs’ trading desk data offered a more provocative angle: the high-beta momentum portfolio declined as much as 8% on the day, while the S&P 500 and Nasdaq 100 both fell by less than 0.5%. This “scissor spread” ranks among the top ten most extreme single-day values over the past five years, and there have already been five such instances so far in 2026.

In addition, the VIX fell 1.78% to 17.08, showing an unusual divergence from the decline in US stocks. Typically, when stocks fall the fear index rises. Here, both moved downward together, suggesting the market may already be waiting for tomorrow’s (Friday’s) non-farm employment data and is unwilling to bet on direction in the short term.

Recent US earnings reports are also highly representative. After the close on May 6, Arm Holdings released FY2026 Q4 results, with adjusted EPS of 60 cents and revenue of $1.49 billion—both slightly exceeding analysts’ expectations. Authorization revenue grew 29% year over year, and royalty revenue grew 11%.

The earnings report itself wasn’t bad. But during the earnings call, management mentioned that the company’s latest AGI CPU data-center chips are facing a supply bottleneck, and that an additional $1 billion in demand cannot be temporarily converted into revenue. Raymond James analyst Simon Leopold wrote directly: “Supply constraints have restrained management’s revenue outlook.”

The stock surged about 13% after hours, then gave back all of those gains. After Thursday’s market open, it fell more than 10%, making it one of the worst-performing technology stocks of the day. This marked the third time in the past year that Arm’s “better-than-expected earnings” were followed by a “big drop the next day.”

Just after Arm finished its after-hours event, CoreWeave stepped up. Q1 actual revenue exceeded expectations, with revenue per share already swelling to $99 billion—Nvidia also injected another $2 billion during the quarter. But the Q2 revenue guidance came in below market expectations, and full-year 2026 capital expenditures were raised to $31 billion to $35 billion, doubling from $14.9 billion in 2025. After hours, the stock once fell more than 10%.

CoreWeave’s losses are real, and its debt is real. But its orders are also real: a $99 billion revenue backlog and continued backing from Nvidia. Still, it’s clear that everyone is questioning whether these future funds can run faster than today’s capital expenditures.

Fed More Hawkish; Non-Farm Employment Data Due Friday

Finally, regarding the Federal Reserve: on that day, the short-term interest rate market showed a slight hawkish shift. The probability of an unexpected rate hike before year-end rose to about 20%. However, the market generally treats this as noise. Labor data remains strong. Early in the week, initial jobless claims only edged up slightly to 200k, and there are still no substantial breaks in the labor market.

The 10-year US Treasury yield rose about 4.8 basis points to 4.393%, moving higher in tandem with the oil price rebound.

The offshore yuan briefly broke above 6.80 intraday, reaching a four-year high, then pulled back slightly. At the New York close, it was 6.8078. The US dollar index rose 0.08% to 98.10.

In gold, spot gold briefly touched a two-week high above $4,700. At the close it rose 0.22%, to $4,701.61 per ounce. The tug-of-war between inflation concerns driven by oil prices and safe-haven demand tied to peace-talk expectations found a balance, giving gold its own footing. Silver saw a bigger gain. COMEX silver futures rose 3.02% to $79.64 per ounce, and spot silver briefly surged above $82.

For European equities, the Europe STOXX 600 fell 1.02%, the UK FTSE 100 declined 1.55%, France’s CAC 40 dropped 1.17%, and Germany’s DAX fell 0.99%.

The variable in the Strait of Hormuz has not been cleared yet. And the next market trigger is Friday’s non-farm employment data. Initial claims this week rose slightly to 200k, but still remained below the market expectation of 206k. Layoff pressure in the labor market is still moderate. With the probability of the Fed hiking rates within the year rising to about 20%, that also means non-farm employment data will become the next coordinate for repricing.