Crypto markets are in a holding pattern as geopolitical tensions in the Middle East overshadow an otherwise improving macro backdrop, according to asset manager Grayscale.
Iran conflict eclipses macro gains; oil surge upends rate-cut bets
“The war in Iran overwhelmed virtually all other market developments in March,” Grayscale’s research team said in a report released Wednesday. Before the escalation, global growth appeared to be accelerating and central banks were leaning toward rate cuts. That outlook was disrupted by a sharp rise in oil prices, which stoked inflation worries and pushed up rate expectations, putting pressure on risk assets and keeping investors on the sidelines.
Since the conflict erupted, crypto markets have been volatile but largely sideways, with sharp, headline-driven moves tied to oil prices and shifting risk appetite. Bitcoin BTC ($64,168.87) initially dropped to the mid-$60,000 range at the first escalation, then recovered toward the low $70,000 before sliding back as the conflict continued and macro conditions tightened.
Bitcoin down ~10% from March peaks; ETH and altcoins also slip
More recently, a fresh escalation pushed bitcoin roughly 10% lower from its March highs, alongside declines in ether (ETH) and other tokens, as investors retreated from risky assets. Despite the turbulence, performance has held up better than some traditional markets — bitcoin has remained roughly flat since the war began and sometimes outperformed equities, highlighting both its sensitivity to macro shocks and relative resilience.
Grayscale expects many market participants will wait for more clarity. If the conflict eases and energy prices fall, markets could quickly reprice toward a more supportive macro environment. If not, persistently high oil prices could continue to pressure growth and delay a broader recovery.
Still, crypto has shown notable resilience. Prices have remained relatively stable during volatility, suggesting a more durable bottom may be forming. The team also pointed to ongoing inflows into spot crypto investment products and a rise in futures positioning as signs that risk appetite is stabilizing under the surface. Going forward, the report argues that the key catalyst for a sustained recovery will be a reduction in macro uncertainty, while the asset class’s long-term drivers — including growing adoption of stablecoins and tokenized assets — remain intact.