"Unstable Two-Week Truce and Soaring Oil Prices" Bitcoin Expected to Retreat to $68,000 Amid Short-Term Correction

▲ Bitcoin (BTC), Crude Oil/ChatGPT Generated Image ©

A surprise truce agreement between the United States and Iran triggered a $280 million short squeeze (buying pressure to close or cover short positions), propelling the leading cryptocurrency Bitcoin (BTC) above $72,000. However, the derivatives market and regulatory uncertainties are still strongly warning of a potential retreat to $68,000.

According to investment media outlet FXStreet on April 8 (local time), Bitcoin surged 6% in less than four hours on Tuesday, fueled by expectations of the Strait of Hormuz reopening. As U.S. President Donald Trump stated his intention to halt Iran's nuclear program in exchange for tariff and sanction relief, global stock markets rebounded across the board, and Bitcoin also rose in tandem, showing a high correlation with S&P 500 futures. In this process, traders who had bet on a decline were caught off guard, resulting in $280 million in forced liquidations.

However, U.S. Vice President J.D. Vance's assessment of the agreement as an "unstable truce" has reignited expectations of a counterattack from bears. Indeed, Bitcoin's derivatives indicators do not yet guarantee sustained upward momentum beyond $80,000. As of Wednesday, Bitcoin futures open interest increased by 2.5% from the previous day to 593,930 BTC, totaling $42 billion, with the $280 million liquidation volume being a negligible portion of the overall market. The annualized futures premium relative to the spot market also remains at 3%, falling below the neutral benchmark of 4%, and in the options market, put (sell) option premiums outweigh call (buy) options, indicating a dominant demand for downside protection.

Regulatory and political hurdles are also firmly holding Bitcoin back. The nightmare of the flash crash on October 10, 2025, and disappointment over regulatory policies have significantly eroded investor confidence. Recent drafts of the Parity Act excluded provisions for tax exemptions on small Bitcoin payments or deferrals of capital gains tax on mining, and David Sacks abruptly resigned from his position as the White House AI and Cryptocurrency Czar on March 26. Despite Treasury Secretary Scott Bessent mentioning a strategy to secure Bitcoin without tax increases, concrete plans remain unclear, and Democrats are urging regulatory authorities to investigate the Trump family's cryptocurrency business due to conflicts of interest.

The fundamental reason bears are not rushing to close their short positions is the persistent inflationary pressure. Brent crude oil prices have jumped from $72 per barrel in late February to $95 currently. As the familiar two-week temporary truce can by no means be a long-term solution to the conflict, the door remains wide open for Bitcoin prices to undergo a deep correction to the $68,000 level at any time amidst profound macroeconomic uncertainty.

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