AI-focused altcoins led a market-wide rally Tuesday after U.S. President Donald Trump announced that he would “postpone” planned strikes on Iran’s energy infrastructure, triggering a cascade of short liquidations.
That short squeeze propagated "hardest into higher-beta names where positioning was already most compressed," Derek Lim, head of research at crypto market-making firm Caladan, told Decrypt.
He also pointed to Nvidia CEO Jensen Huang's GTC conference last week as a second catalyst. The convergence of the two events added tailwinds to the AI sector, he said.
"Conflicting statements around the Iran war are increasing uncertainty, which fuels risk aversion," Illia Otychenko, lead analyst at cryptocurrency exchange CEX.IO, told Decrypt. "That uncertainty is keeping oil prices elevated and lowering expectations for rate cuts."
For now, with both oil prices and Treasury yields rising, inflation remains a key concern, he said. That dynamic is "not that bad for Bitcoin due to its store-of-value narrative."
Otychenko warned that the bigger risk would be if oil prices and Treasury yields start moving in different directions. "That would create a more complex macro backdrop that could test Bitcoin's store-of-value narrative as it would put significant pressure on most assets except bonds and the U.S. dollar."
