The Weekly: State of the Market Since the Iran Escalation

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Weekly Summary

We cover:

• Risk-on signals despite geopolitical backdrop

• Crypto outperformance vs. equities and precious metals

• Sentiment indicators suggesting recovery but far from euphoric levels

• Where cross-asset trends are aligning with liquidity

State of the Market Since the Iran Escalation

It has now been over two months since the start of the Middle East conflict between the US and Iran.

The immediate narrative following the February 28th strikes on Iran was predictable: geopolitical escalation should depress risk assets and drive flows into traditional safe havens.

However, price action across macro and crypto markets suggests a different interpretation — a reminder that the market is not the economy. Meanwhile, big banks are seeing record earnings. GDP growth are beating estimates. Hm seems off.

Let’s run through the market data to see the state of play…

Key Sectors/Indices

Brent crude is in a broad range with a slight downward drift, with the bias being to sell strength rather than chase longs.

Despite oil prices briefly touching >100, broader market volatility has come down as negotiated resolution gets priced as the most likely outcome.

Brent crude (4hr) since Feb 28th 2026.

Dollar is now trading below where it was after the first week of strikes, with dollar weakness essentially becoming a de-escalation trade.

Dollar index (daily). Start of war signified with dashed line.

Higher energy prices may lead to rising rate expectations in Europe but, since the conflict began, investors are now pricing in Fed cuts this year…

BTC has rallied +23.4% off the Feb 28th lows…

BTC/USD (2hr) since Feb 28th 2026.

A key driver of the positive skew has been the constructive macro backdrop heading into the conflict, including rising global net liquidity.

Global liquidity on an 80-day forward basis increased by 3%. Typically, we see a 7–12× elasticity effect on crypto valuations. Crypto has performed +19%.

Global crypto MCAP (white) vs. global net liquidity (yellow) since Feb 28th 2026.

Cross-Asset Ratios

ETH/BTC has rallied +2.53% off the Feb 28th lows — also showing an ascending range (positive skew). Capital is rotating down the risk continuum…

ETH/BTC ratio (1hr).

Altcoin market index has rallied +10.9% off the Feb 28th lows — also showing positive skew.

Altcoin Global MCAP index (1hr).

Altcoins, on a broad index basis, have underperformed BTC since the February 28 lows.

On a higher timeframe, however, this move reads as a retracement within a broader uptrend.

Alts (outside of top 10) vs. BTC (2hr). Feb 28th weekend denoted by dashed line.

Crypto sentiment has recovered in line with valuation re-ratings.

Fear & Greed index has increased from 12 (extreme fear) to 46 (neutral). Despite the performance, investors remain cautious, with sentiment yet to return to greed territory.

Crypto Fear & Greed Index (white line) vs. global crypto MCAP (candles) since Feb 28th 2026.

Relative Ratios

Off the Feb lows, BTC has outperformed Gold by +33%…

BTC/Gold ratio since Feb 28th 2026 (2hr).

…while BTC has outperformed NASDAQ by +12%. The BTC/QQQ ratio shows clear consolidation looking for its next high conviction direction.

BTC/NASDAQ ratio since Feb 28th 2026 (2hr).

Crypto markets have moved directionally in line with the Russell 2000 (small cap index) but outperformed +11%.

Russell 2000 (pink) vs. global MCAP (white) since Feb 28th 2026.

Closing Remarks

While energy markets initially reacted as expected, broader asset pricing has increasingly reflected de-escalation expectations and, more importantly, a continuation of supportive macro conditions.

Liquidity expansion, rate path repricing, and cross-asset correlations point to a market still being driven more by underlying macro forces than by event-driven fear.

That said, while growth may soften at the margin, markets remain far from pricing a full recession. Even with the rebound, positioning and sentiment suggest investors aren’t fully leaning into the move — conviction remains cautious, with little evidence of exuberance.

State of Yields

Stablecoin lending yields:

• ~4.3% on Aave (USDC) — utilisation rates for USDC markets have started to normalise from 100% to ~93% as confidence restores by prospective depositors from bad debt being covered by a collective fund.

Fixed-rate DeFi lending: yield premium in fixed markets marginally expanding from last week:

• Pendle sNUSD: 7.3% (Jun 2026)

• Pendle sUSDAi: 7% (Jun-Oct 2026 maturities)

• sUSDe: ~5.3%, slightly up from ~3.9% last week as sUSDE TVL has dropped from $3.5b to $2.1b since the 18th of April

ETH yield benchmarks:

• Lido staking: ~2.5% (no meaningful change over the last week)

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