- A crypto crash may be on the cusp of happening in the near term.
- There are chances that the Iran-US deal may falter amid US opposition.
- The Federal Reserve may embrace a more hawkish tone.
Bitcoin and other major altcoins have remained resilient in recent days as investors embrace a risk-on sentiment. BTC has rebounded from its year-to-date low of $59,000 to $67,000, while Ethereum and XRP have posted double-digit gains. However, a major risk could still trigger another crypto crash: Trump’s Iran deal.
Crypto Crash Possible as Trump’s Iran Deal Faces Major Opposition
A major risk that could trigger a crypto market crash is the US-Iran Memorandum of Understanding (MoU) signed this week. It will then be signed in a ceremony in Switzerland later this week.
According to Bloomberg, the MoU has 14 sections, including the end of Iran’s oil and banking sanctions, the reopening of the Strait of Hormuz, and the creation of a $300 billion reconstruction fund by Gulf countries. Also, the deal says that the ceasefire also applies to Lebanon.
READ MORE: Forget VOO Stock: Here’s Why the IWO ETF is Firing on All Cylinders
Trump has denied the leaked details of the proposed deal and has not authorized their publication, including claims about a $300 billion reconstruction fund. However, if the reported details are accurate, and there is a possibility that they are, the agreement could face significant political opposition in Washington, increasing the likelihood that lawmakers attempt to block or overturn it.
Indeed, some of Trump’s top allies have already voiced their concerns about the deal. In separate statements, Senators Lindsey Graham, Roger Wicker, and John Kennedy have insisted that the deal should be voted on by the Senate. It has no chance of passing the Senate, as legislators will argue that it will enrich Iran and make it a more lethal force.
If all this happens, it will leave the US and Iran in a quagmire, thereby boosting crude oil and fertilizer prices. These fears explain why crude oil prices rose today, with Brent moving back to $80 a barrel.
Higher crude oil prices would lead to higher inflation for longer, making it hard for the Fed to cut interest rates. Bitcoin and other altcoins often do well when the Fed is having a dovish tone.
Federal Reserve Interest Rate Decision
The other main risk facing Bitcoin and the crypto market is the upcoming Fed decision. Economists believe that the Fed will leave interest rates unchanged at 3.5%-3.7%. Besides, inflation has stayed above the 2% target for years.
The most important thing in this meeting will be Kevin Warsh’s statement, which will provide more color on what to expect from the bank. Most economists expect the bank to maintain a fairly hawkish tone, which may hurt risky assets.
Separately, the booming stock market is negatively affecting crypto prices. With stocks in key countries like South Korea, Japan, and the US soaring, many traders have begun focusing on equities. This explains why crypto ETFs have had substantial outflows in the past few months, while stock funds have gained over $1 trillion.
READ MORE: Why PURR Stock Is Soaring While Digital Asset Treasury Stocks MSTR, BMNR Bleed
