Bitcoin recovers to 105k on Israel-Iran ceasefire – Is 110K next?

Bitcoin has rebounded from a spike below 100k, extending yesterday’s recovery to 105k amid easing geopolitical tensions in the Middle East, rising Fed rate cut expectations, and regulatory tailwinds. 

The cryptocurrency market capitalization has risen by 4.4% over the past 24 hours to reach $3.26 trillion. The total 24-hour trading volume across all crypto assets has increased by 10% to $150 billion, suggesting increasing buyer interest. 

Israel-Iran ceasefire boosts risk sentiment 

Risk sentiment improved after President Trump announced a total ceasefire between Israel and Iran, pausing the 12-day war. The announcement sparked a recovery in risk appetite, lifting crypto markets sharply higher. Bitcoin has jumped over 4% across the past 24 hours, and other cryptocurrencies such as Ethereum and XRP are up over 7%. The markets will continue to monitor developments in the Middle East to determine whether the ceasefire is adhered to. 

Rising Fed rate cut bets 

As a result of the ceasefire, oil prices have fallen sharply, dropping back to levels seen before the escalation of tensions in the Middle East, easing worries of inflationary pressures.  

Furthermore, Fed official Michelle Bowman said she could support a July interest rate cut should inflation remain low. Her comments come after Governor Christopher Waller said last week he was also open to cutting rates as soon as July.  

According to the CME fed watch tool, the market's expectations of a 25 basis point rate cut in the July meeting rose to 23%, up from 16% just a week ago. Attention will be on Federal Reserve Chair Jerome Powell’s testimony before the Senate later today for further clues on the path for rates. Bitcoin often performs well in a low-interest environment. 

Regulatory tailwind 

Bitcoin is receiving a tailwind from further regulatory advances after the Federal Reserve says it no longer considers “reputational risk” amid its supervision of banks. Why does this matter? The crypto industry has argued that this area was used to target firms unfairly. Previously, industries deemed risky faced significant challenges in maintaining banking relationships and services. This change of stance is expected to reduce red tape for digital asset businesses. 

Institutional and corporate demand remain strong 

US BTC ETF demand has booked a 10^th straight day of net inflows, pointing to solid institutional demand even when geopolitical tensions were high. Meanwhile, a growing number of corporations are adopting a Bitcoin treasury strategy, increasing demand and raising legitimacy. Corporations now own over 3.2% of the total BTC supply. 

Bitcoin technical analysis 

After reaching a record high of 111.9k, BTC/USD has formed a series of lower highs and lower lows, in a falling channel and potentially a bull flag. The price recovered from its spike to 98k, with the long lower wick suggesting little selling demand below 100k. The bullish engulfing candle, combined with the bullish crossover on the MACD, keeps buyers hopeful of further gains.  

Buyers are testing the 20 SMA at 105.4k. A rise above here is needed to open the door to 109k, the falling trendline resistance, and 110k, the June high. A rise above these levels creates a higher high, bringing 111.9k and fresh record highs into focus towards 120k 

Should sellers successfully defend the 20 SMA, bears could look to retest the 100k support. A close below this level could be significant and expose the 200 SMA at 96k. 

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