Bitcoin Surges 10% to $105,000 on Iran-US Dialogue Hopes

Bitcoin (BTC) experienced a surge to $105,000 following the June 18 market open, driven by news that Iran had reached out to the US for dialogue. This development provided a sense of relief to the market, which had been highly sensitive to the ongoing Iran-Israel conflict. US President Donald Trump confirmed that Iran had initiated contact, stating that he was unsure how long the conflict might continue. This news helped to alleviate some of the uncertainty that had been weighing on the market.

The positive momentum for Bitcoin was further supported by US unemployment data, which met expectations and avoided adding more uncertainty over inflation. However, concerns remained about the potential impact of US trade tariffs and the Middle East tensions on oil prices. Analysts warned that the Federal Reserve's decision on interest rates, expected later that day, could have significant implications for risk assets, including Bitcoin. According to the analyst's forecast, the Fed was expected to hold rates steady while striking a hawkish tone, acknowledging the fresh upside risks to inflation stemming from geopolitical instability.

Trump, who has been vocal about his demands for interest rate cuts, reiterated his stance despite market expectations that cuts would not come until Q3. He criticized Fed Chair Jerome Powell, calling him a “stupid person” and asserting that the tariffs had not led to inflation. This rhetoric added to the uncertainty surrounding the Fed's decision and its potential impact on the market.

Among Bitcoin traders, there was anticipation of a potential short squeeze, with the market positioned for further losses. Order book data showed that the area around $103,000 was particularly primed to act as a short-term price magnet should a liquidity grab ensue. Traders noted that the market was reacting positively to headlines of de-escalation, with order books skewed towards bid depth and perp positioning being pretty short with all the stacked defensive positioning in place.

Despite the positive news, the market remained cautious, with traders preparing for potential liquidity grabs and short liquidation events. The upcoming Fed decision added to the uncertainty, with analysts warning that a reduction in the forecast for interest rate cuts could pressure risk assets, including Bitcoin. Overall, the market was closely watching developments in the Iran-Israel conflict, US trade tariffs, and the Fed's decision on interest rates, all of which could have significant implications for Bitcoin's price movement.