Bitcoin surges 5% to $105,000 on Iran-Israel ceasefire

Bitcoin experienced a significant rebound, surging above $105,000 following the announcement of an Iran-Israel ceasefire. This recovery came after the cryptocurrency had dipped below $100,000 over the weekend, triggered by U.S. missile strikes against Iran's nuclear facilities. The volatility index for Bitcoin hit its lowest level since October 2023, settling at 39.15, indicating that traders anticipated stable prices around $105,000 as the monthly options expiry approached on Friday.

Despite the price recovery, derivatives traders remained cautious. The open interest in Bitcoin perpetual futures saw a sharp decline of 17,394 BTC in just 24 hours, marking the most significant drop since August 2024. This reduction in open interest suggested that traders were de-risking their positions, reflecting concerns over the stability of the ceasefire. The Fear & Greed Index, which measures market sentiment, remained in the greed territory at 65, but traders were hesitant to add more risk to their portfolios.

The low-leverage environment, reminiscent of levels seen in April, indicated more stable price action in the short term. This stability was particularly notable given the upcoming monthly Bitcoin futures expiry on June 27. Derivatives traders use options contracts to bet on future price movements, and the current low volatility suggested that traders did not expect significant price swings. However, the analysts noted that while Bitcoin implied volatility remained low, short-dated implied volatility on contracts expiring this week was still high due to ongoing geopolitical tensions.

Analysts from Wintermute's OTC desk observed that flows were neutral, with straddle/call selling around $105,000 and short puts at $100,000 for the June 27 expiry. This indicated that traders expected Bitcoin to stay near the $105,000 price level. Additionally, there was some bullish sentiment coalescing around Bitcoin options with July and September expiries, suggesting that traders anticipated the current uncertainty to settle soon. The analysts also noted that headline risks and uncertainties were poised to expand in the weeks ahead, as focus shifted toward other geopolitical and economic factors.