Key takeaways:

• The ceasefire in the US and Iran has strengthened the stock and Bitcoin markets, but BTC derivatives suggest restricted growth dynamics.

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• Legislative setbacks and a “fragile truce” between the US and Iran are keeping bears energetic, with a potential $68,000 correction on the cards.

Bitcoin (BTC) rose 6% in less than four hours on Tuesday following gains in global stock markets after the United States and Iran reached a two-week ceasefire agreement. The rally surprised traders, causing $280 million worth of liquidation in Bitcoin futures markets.

Bitcoin bears could be in trouble if the Iran war actually ends, but BTC derivatives are signaling that a sustained rally above $80,000 may take longer than expected.

Bitcoin’s high correlation with S&P 500 futures suggests that BTC’s rally was mainly driven by the potential reopening of the Strait of Hormuz. US President Donald Trump said that Iran’s nuclear program would be deactivated in exchange for easing tariffs and sanctions. However, Bitcoin bears’ hopes have increased following US Vice President JD Vance he said that the Iran ceasefire is a “fragile truce.”

Continued inflation pressure and frail Bitcoin derivatives metrics

Sustained de-escalation would likely lead to lower oil prices and reduced inflationary pressures, potentially paving the way for expansionist monetary policy. The US Federal Reserve remains reluctant to cut interest rates despite signs of a weakening labor market. Traders who had previously exited risk markets changed their minds as the risk of severe economic impacts diminished.

While forced liquidations of $280 million in bearish leveraged positions accelerated growth, BTC derivatives positioning showed little change.

Total open interest in Bitcoin futures reached 593,930 BTC on Wednesday, up 2.5% from Tuesday. Most importantly, liquidations of $200 million to $300 million are relatively common and have occurred five times in the last 90 days. This $280 million case remains petite compared to the $42 billion total futures position.

The annual premium for Bitcoin futures over regular spot markets was 3% on Wednesday, unchanged from two days earlier. The lack of demand for bullish positions has brought the rate below the neutral 4% threshold since overdue January.

Demand for downside protection Bitcoin options has prevailed over the past two weeks. Put (put) option premiums outperformed put (call) instruments, although distancing themselves from the extreme levels of fear observed on March 26.

Will regulatory hurdles stop Bitcoin’s rally?

Bitcoin bulls’ confidence has already been damaged by the October 10, 2025 flash crash, regulatory disenchantment, and lack of progress on the US Bitcoin Strategic Reserve. The latest PARITY bill does not include tax breaks for petite Bitcoin payments or deferred capital gains from mining. Additionally, on March 26, David Sacks stepped down from his role as White House AI and cryptocurrency czar.

Related: Iran Weighs Crypto Fees for Ships Using Strait of Hormuz – Report

Despite repeated mentions by U.S. Treasury Secretary Scott Bessent in 2025 of “budget neutral” strategies to acquire Bitcoin without adding novel taxes, no clear path was ever revealed. At the same time, the US Democratic Party has asked regulators to investigate the Trump family’s cryptocurrency ventures based on a potential conflict of interest.

There is no indication that Bitcoin bears are in a rush to close out their shorts despite the recent rally. Inflationary pressures have yet to abate as Brent crude oil prices remained at $95 a barrel, down from $72 a barrel in overdue February. More importantly, the two-week ceasefire is far from a long-term solution, leaving wide prospects for a correction to $68,000.