The overall crypto market cap rose 2.3% as traders hoped for de-escalation in the Middle East.
On a bustling Tuesday, the crypto markets experienced a significant uptick, with Bitcoin (BTC) taking the lead. On June 24, Bitcoin surged 5.3%, reclaiming its position above $105,000. This bullish momentum was not exclusive to Bitcoin; many altcoins also saw remarkable gains, resulting in a total crypto market cap increase of 5.19% during the day.
Ethereum (ETH) displayed impressive performance, climbing 11.33%. Other notable altcoins included XRP (XRP), which rose 10.15%, Solana (SOL) with a 9.61% increase, and Cardano (ADA) showing a 9.4% jump. Even memecoins like Dogecoin and Shiba Inu experienced strong gains, approaching double digits. The overall enthusiasm in the market was palpable, signaling a shift in sentiment among traders.
The catalyst behind this rally appeared to be the hope for reduced tensions in the Middle East. U.S. President Donald Trump announced a ceasefire between Iran and Israel on Tuesday, calling for both sides to adhere strictly to the terms. This announcement came on the heels of U.S. military action targeting Iran’s nuclear facilities, which prompted a cautious response from Iran involving strikes on U.S. bases in Qatar.
Interestingly, Iran’s response was calculated, reportedly offering advanced warning to U.S. personnel, which prevented further escalation. This strategic maneuver by Iran brought a sense of relief to traders, as the risk of a prolonged conflict—with possible global repercussions—receded. Market participants were acutely aware that a prolonged conflict, especially one involving the U.S., could lead to economic disruption and instability worldwide. Increased tensions had also contributed to rising oil prices, stoking inflationary fears that could adversely impact the crypto markets.
Indeed, Iran’s previous threats to close the Strait of Hormuz, a critical artery through which approximately 20% of global oil production passes daily, underscored the precarious nature of this situation. With oil prices closely linked to economic stability, central banks often raise interest rates in response to global crises, a move that traditionally stifles market assets like cryptocurrencies.
Where will Bitcoin and Ethereum go next?
Although the ceasefire between Iran and Israel is tenuous—evident from subsequent Israeli airstrikes on Iran—Trump’s firm response seemed to have necessitated a de-escalation from Israel, at least for the present. The decreased likelihood of immediate escalation opens a window of opportunity that traders may capitalize on in the short term.
As a result, both retail and institutional traders may adopt a more risk-on stance, seeking higher returns in the crypto space. Looking ahead, significant growth drivers could include the GENIUS Act, which aims to introduce a regulatory framework for stablecoins in the U.S. Additionally, institutions are expected to continue accumulating Bitcoin for their balance sheets, which could further fuel market sentiment and drive prices higher.
