- The crypto rally resumed on Monday as Bitcoin price jumped to $70,000.
- This surge happened amid hopes that Iran and the US were nearing a ceasefire.
- There are reasons to believe that the ongoing crypto market rally is a bull trap.
A crypto rally is underway today, with Bitcoin price rising to $70,000 and the market cap of all coins rising by 3.4% to over $2.6 trillion. Some of the top gainers were RedStone, Momentum, Axelar, and Brett.
Crypto Rally Triggered by US and Iran Talks
The ongoing crypto rally has coincided with the performance of American stocks, with futures tied to the Dow Jones Industrial Average rising by over 110 points.
This rally was driven by media reports that the United States and Iran were in talks and considering a ceasefire.
The report emerged from Axios, which noted that the ceasefire would be 45 days. In a separate report, Reuters said the two sides held serious talks involving top officials such as JD Vance, Steve Witkoff, and Abbas Aragchi.
As part of the deal, Iran would be required to opt for the Strait of Hormuz in exchange for ending sanctions. It would also not commit to ending its pursuit of nuclear power.
A deal between Iran and the US would be bullish for the crypto market due to its impact on commodity markets. For example, it would lead to a sharp decline in crude oil prices, which have jumped by more than 100% from their year-to-date low.
Such a move would help slow inflation in the United States, supporting the Federal Reserve’s interest rate cuts.
It would also prevent an escalation in the region. In a statement on Sunday, Donald Trump threatened to destroy Iran’s infrastructure, including power plants and bridges, a move that would be a war crime. Iran has vowed to retaliate by attacking similar projects in the Middle East.
READ MORE: Will the Upcoming Morgan Stanley Bitcoin Trust Boost the BTC Price?
Crypto Market Rally May Be Short-Lived
Still, the ongoing crypto market rally will likely be short-lived as the gap between the two sides is too wide.
For example, the US sent 15 demands to Iran that its officials believe are unachievable. They include ending Hamas, Houthis, and Hezbollah funding, limiting the ballistic missile program, ending all uranium enrichment, and fully reopening the Strait of Hormuz.
On the other hand, Iran sent five demands, including the shutting of US bases in the region, a complete halt to aggression, reparations for the war, and ending hostilities towards the resistance.
It will be difficult for the two sides to bridge the gap, meaning that the war may continue in the foreseeable future. Besides, Trump has already sent thousands of troops to the Middle East, meaning that he may be interested in a land invasion either to blockade Kharg Island or to take the enriched uranium.
Another reason Iran may reject a deal is that it is already making more money than before. It is selling more oil at higher prices through tolls at the Strait of Hormuz.
Also, Iranian officials believe that they have an upper hand because most of their missiles are still intact at a time when Israel is rationing its interceptors. As such, they expect that a prolonged war will benefit them.
Therefore, the ongoing crypto rally may be a bull trap, also known as a dead cat bounce.
READ MORE: Siren, StakeStone, Zebec Network Rally as the Crypto Winter Continues
