MICA Daily | Trump Manipulates Market with Words Again? US-Iran Tensions Ease, Markets Rally

Yesterday evening, before the U.S. stock market opened, Donald Trump announced progress in negotiations with Iran that was “effective” and decided to delay the planned military strike on Iran’s energy facilities by five days. However, Iran denied any negotiations were taking place. The conflicting news caused intense volatility in global investment markets. Below is an analysis of the subsequent impact on various asset classes:

Cryptocurrency Market: Risk Sentiment Rebounds and Short Squeeze As a global 24-hour trading “risk indicator,” cryptocurrencies reacted most quickly:

• BTC Rebound: After the announcement, Bitcoin rapidly bounced from around $67,000, briefly surpassing the $71,000 mark. The market generally viewed this as a temporary easing of geopolitical risk, leading to short covering.
• Massive Liquidations: Data shows that due to the rapid market reversal, crypto markets experienced over $270 million to $360 million in short liquidations within hours, indicating that market expectations of war had been disappointed, triggering a chain reaction of automatic buy orders.
• Ethereum and Altcoins: Major tokens like ETH and SOL also rose, with gains generally between 3% and 5%. If negotiations make further substantive progress, funds may shift further from safe-haven assets into crypto markets.

Traditional Investment Markets: Stock, Bond, and Currency Reactions

• Stock Market Surge: The three major U.S. indices (S&P 500, Dow Jones, NASDAQ) all rose collectively after the news. Investors, initially worried about soaring energy costs fueling inflation, turned optimistic, with funds flowing back into tech, aerospace, and banking stocks.
• Oil Prices Plummet: This was the most directly affected sector. Brent crude oil dropped sharply by 7% to 10%, returning to around $100; WTI also fell below $90. The previously anticipated supply disruption pressure was temporarily alleviated by the five-day buffer period.
• Safe-Haven Assets Retreat (Gold, USD): As safe-haven demand decreased, gold prices retreated from highs, and the US dollar index also declined. This indicates the market is shifting from “war pricing” to “diplomacy pricing.”

Future Investment Outlook and Potential Risks Although Trump’s announcement caused a brief market rally, significant uncertainty remains:

• Repeated News Fluctuations: Iran later denied direct negotiations with the U.S. and claimed Trump’s remarks were aimed at suppressing oil prices. This “mixed messaging” led to market volatility after the initial surge.
• Five-Day Observation Period: This is the current critical window. If no substantive dialogue occurs within five days, markets may worry about Trump launching more aggressive military retaliation, which could send oil prices soaring again and cause risk assets like Bitcoin to retreat.
• Inflation and Interest Rate Policies: If oil prices stabilize through this event, it could help ease inflation pressures in 2026, giving the Federal Reserve room to consider rate cuts. This would be a medium- to long-term positive for cryptocurrencies and equities.

Market Outlook Currently, markets are mainly driven by news, and with Trump’s fluctuating stance, it’s difficult to predict the trend this week. It is advisable to avoid excessive leverage. Since Trump has set a five-day observation period, unless Iran takes significant action, the U.S. is unlikely to launch a large-scale attack, and markets may remain relatively stable until the weekend. However, this move also delays the market’s digestion of bad news and adds more uncertainty. If Trump decides to continue attacking Iran over the weekend, the cryptocurrency market could face another downturn.