Wintermute Market Weekly Report: Iran War Ends, Inflation in Line with Expectations, BTC Bounces to Lower $60K Range—But Don’t Rush to Buy the Dip
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Wintermute Market Weekly Report: Iran War Ends, Inflation in Line with Expectations, BTC Bounces to Lower $60K Range—But Don’t Rush to Buy the Dip
Unless there is major news, the volatile market conditions will persist into summer.
Navigating Web3 tides with focused insightsAuthor: Wintermute
Compiled & Translated by TechFlow
TechFlow Insight: This week’s market rebound was driven by two developments: U.S. inflation data coming in line with expectations and Trump’s announcement of an end to the Iran conflict—both contributing to risk-asset gains in the same direction. Crucially, oil prices plunged, further fueling the rally. Yet the true turning point for crypto markets hinges not on price rebounds but on capital inflows—none of which—stablecoin flows, ETF inflows, or institutional capital—have shown structural improvement yet. Don’t let volatility “stop you out” before these signals materialize.
Macroeconomic Markets
This week’s market rebound was driven by two developments—and unusually, both pushed in the same direction.
First, May CPI data.
Year-on-year inflation stood at 4.2%, accelerating for the third consecutive month and hitting its highest level since 2023—but it matched expectations. That “in line with expectations” is the entire story. Bond markets had been bracing for higher-than-expected inflation, fearing it could prompt Chair Warsh to pivot hawkish earlier. But the data wasn’t worse than feared. Core inflation fell to 2.9%, suggesting energy-driven inflation may have peaked rather than spilling over into services and wages. After three weeks of concern about a potential second inflationary spiral, an in-line print was enough to trigger collective sighs of relief.
Second—and more importantly—the resolution of the Iran conflict.
After more than 100 days, Trump announced on Sunday that an agreement had been reached, authorizing the reopening of the Strait of Hormuz and lifting the naval blockade; formal signing is scheduled for June 19 in Switzerland. Brent crude has tumbled from a recent low near $110 to above $80 over the past month—and dropped 6.6% alone this week. The geopolitical risk premium that had driven markets since late February is rapidly dissipating, pulling down both the U.S. dollar (DXY -1%) and yields (the 10-year yield retreating to ~4.50%). Falling oil prices directly lower the forward inflation path—which explains why this week’s CPI data and the ceasefire agreement reinforced each other, rather than offsetting one another.
Cross-asset moves tell this easing story clearly. The Russell 2000 led gains (+4.0%), followed by the Nasdaq (+2.3%), altcoins (+3.1%), and BTC (+1.9%), while Brent crude lagged sharply. Risk sentiment rotated away from energy; the energy risk premium drained out. The only notable laggard was long-duration Treasuries: bonds maturing beyond 20 years rose just +0.8%, as the 4.2% headline inflation figure capped how far yields could fall—even with the war premium gone.
All of this sets up a genuinely thorny situation ahead of the upcoming FOMC meeting. The 4.2% headline inflation supports the “higher for longer” narrative. Meanwhile, softening core inflation and plunging oil prices suggest the shock is transitory—and even open the door to rate cuts next. No policy shift is expected on Wednesday, so all eyes will be on the dot plot, updated projections, and Warsh’s first press conference. How he frames this contradiction—whether anchoring to headline inflation or looking through to core and oil—will set the tone for the rest of the year.
Digital Assets
To understand this week, we must start two weeks ago—when the entire sector fell over 10% and BTC dropped 14% in a single week. Crypto-only observers blamed Michael Saylor’s sale of 32 BTC and the resulting capital concerns. In reality, two broader drivers were at play:
(i) Rising inflation fears combined with strong nonfarm payroll data triggered broad-based risk-off rotation, and
(ii) The rally from the $60,000 low to $83,000 was confirmed to lack further support. That was a bear-market rally—and it’s now officially confirmed.
This week marked a rebound. BTC rose +1.9% from its $60,000 low; altcoins gained +3.1%, buoyed by the in-line CPI print and the ceasefire agreement. ETH was the clear laggard, falling -0.4% while everything else rallied—extending its relative weakness. There’s no structural change here. It’s simply high-beta risk assets reacting to improved macro conditions.
Stepping back, we’ve experienced three drawdowns exceeding 20% since last October. What differentiates them is their character. The first two were directional sell-offs. The most recent drop—from $83,000 down to $60,000—was a bear-market fakeout: the kind of volatile, two-way action that stops out both longs and shorts. Perpetual futures and options positioning show minimal interest in directional exposure—a normal state right now. Absent major news, the base case remains range-bound trading into summer.
The harder question is when the trend will turn—and the answer lies in liquidity. Cryptocurrencies remain macro assets: valves releasing excess liquidity, which arrives via three channels—stablecoins, ETFs, and DATs (Digital Asset Treasury companies). None of these channels is reversing. DAT AUM has declined from ~$220 billion to ~$140 billion; aside from Strategy, Bitmine, and Strive, new fundraising has virtually halted. ETFs have just posted their longest streak of outflows since launch, with no sign of reversal last week. Stablecoin flows follow the same outflow trend.
It’s worth recalling how the last cycle actually began. There was a bottom and recovery—but the real bull run kicked off early in 2024, following ETF approval (which had already been priced in) and the capital it unleashed. If the thesis is a move back toward $100,000, the critical question is: where does that capital come from? Right now, institutions are on the sidelines, while retail focuses on leveraged ETFs and single-stock trading. Before this trend reverses, calling a bottom feels premature. We need to see structural shifts in stablecoin minting/redemption, ETF flows, and/or DAT activity.
Our View
Don’t get stopped out by volatility
The risk-reward ratio at the $60,000 low looks attractive on a long-term basis—each washout leaves behind a higher-quality, more conviction-driven holder base. That doesn’t mean a bottom has formed. Trading down to $50,000+ before any improvement is still possible. Positions have been cleaned out and net selling pressure has eased—but this is occurring against the backdrop of shrinking summer volume.
The only thing worth watching is capital flows—not price, not headlines. Sustained inflows into ETFs and stablecoins marked the true start of the prior cycle—and we’re seeing no such signs yet. The prudent stance amid this environment is not to overcommit to any bounce and risk getting whipsawed.
In the near term, Wednesday’s Warsh speech is the key catalyst. A dovish reading of softening core inflation and lower oil prices would extend the easing narrative; a hawkish interpretation of the 4.2% headline print would end it. Beyond that, Friday’s U.S.-Iran signing ceremony in Switzerland is another key event.
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