Bitcoin (BTC) dropped to $63,000 before recovering toward $67,000 after coordinated U.S.-Israeli military strikes on Iran over the weekend triggered a broad sell-off across risk assets, according to a Mar. 2 market update from trading firm Wintermute.
What Happened: Conflict Shakes Markets
The operation, which Wintermute described as "Epic Fury," involved strikes on Iranian military sites late Saturday that reportedly killed the Supreme Leader and top officials. Iran responded with drone and missile attacks hitting Israel, U.S. bases, Dubai and Abu Dhabi.
By Monday, the Strait of Hormuz was effectively closed and Gulf airspace was shut down.
The conflict entered its third day with no clear path toward de-escalation.
Oil surged 9%, briefly crossing $80, while analysts raised their Brent crude forecast to $100. Gold hit near $5,400, adding roughly $1 trillion in market value within hours.
U.S. equities gapped lower at the open, with the Dow falling more than 500 points at its lows before trimming losses. The VIX reached its highest level of 2026. Defense stocks rose sharply. Crypto ETF flows offered a brief counterpoint late last week, with over $1 billion in net inflows snapping a five-week outflow streak. Year-to-date outflows still sit at roughly $4.5 billion.
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Why It Matters: Inflation Risk Grows
Wintermute warned that sustained high oil prices could keep inflation elevated just as central banks were counting on cooling, potentially pushing back U.S. rate cuts further. The firm noted that crypto "sits at the wrong end of that trade."
Institutional participation on the desk remains notably low compared with the $85,000-$95,000 range BTC traded in from November through September, when buying into weakness was far more active. "At these levels, the bid simply isn't there," the firm said.
Options volatility spiked sharply, with DVOL jumping from the 30s-40s range to around 55 — the biggest move since 2023.
Options are now pricing in daily swings of 2.5% to 3%.
Despite heavy put skew, Wintermute noted a forming consensus that BTC in the mid-to-high $50,000s would present attractive risk-reward on a 12-to-18-month basis.
Altcoins continue to follow a typical bear market pattern, with short-lived rallies and little appetite to chase gains. If the Strait of Hormuz stays closed and energy prices remain elevated, the firm said, the rotation into hard assets and commodities "has further to run" — leaving crypto unlikely to attract meaningful bids.
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