TechFlow reports that on March 10, Wintermute released its market report stating that, as the Middle East conflict enters its second week, Brent crude oil surged 26% this week. Energy-driven inflationary pressures have compressed market expectations for Federal Reserve rate cuts in 2026 to just a single cut. Major risk assets broadly declined: the S&P 500 fell 2.0%, the Nasdaq dropped 1.2%, and the Russell 2000 plunged 4.0%; gold also declined due to deleveraging.
Cryptocurrencies emerged as the standout asset class this week: BTC rose 0.4%, ETH was flat, and altcoins fell 0.4%. The historically high correlation between crypto and equities showed signs of loosening. Wintermute’s analysis suggests current crypto market leverage stands at approximately $60 billion—only half its peak level—meaning forced liquidation pressure remains relatively low, which is the primary reason for crypto’s outperformance. Bitcoin’s resilience amid risk-averse conditions has also reignited discussions around its narrative as an inflation hedge.
Next week’s FOMC meeting will be a key near-term catalyst; hawkish signals from the Fed or further escalation of geopolitical tensions would weigh negatively on markets.
