I. Geopolitical "Stalling Tactics": Trump's "Change of Heart" and the Game in the Strait of Hormuz

The situation in the Middle East in March 2026 has become a core variable disturbing global risk assets. On March 21, U.S. President Trump issued an "ultimatum" to Iran, demanding that Iran open the Strait of Hormuz within 48 hours, or else the U.S. would destroy Iran's "various power plants." Iran responded firmly, stating that if the U.S. took action, all energy and oil facilities in the Middle East would be considered legitimate targets for attack. However, as the deadline approached, Trump dramatically announced on March 23 that the U.S. would "postpone by five days" its strike on Iranian power plants, claiming that the U.S. and Iran had engaged in "very good and productive" dialogue over the past two days and had formed the main points of an agreement.

This "last-minute change" reflects the multiple pressures faced by the U.S. government. First, the ongoing conflict has pushed global oil prices above $110 per barrel, with the average retail price of gasoline in the U.S. nearing $4 per gallon, up more than $1 since the end of February, directly exacerbating domestic inflationary pressures. Second, high oil prices pose a threat to the midterm election prospects, with the conservative think tank Heritage Foundation warning that if the conflict escalates, the Democrats could "take control of Congress" in the midterm elections. Additionally, U.S. Gulf allies privately warned Trump that bombing Iranian power plants could lead to a "catastrophic escalation" of the situation. These factors collectively contributed to Trump's softening stance.

However, there are fundamental discrepancies in the official statements from both the U.S. and Iran. Iranian Foreign Ministry spokesman Baghaei clearly stated that Iran has not held any negotiations with the U.S., and has only received some messages from friendly countries conveying U.S. information over the past few days. Iranian Parliament Speaker Ghalibaf also denied any negotiations with the U.S. This contradiction has raised market vigilance—just as Professor Liang Yabin from the Central Party School's Institute of International Strategic Studies analyzed, Trump's move is likely a "stalling tactic": on one hand, after more than 20 days of airstrikes, the U.S. military's missile inventory may be insufficient and needs time to replenish; on the other hand, the U.S. Marine Corps' 31st Expeditionary Unit is set to arrive in the Middle East on March 27, coinciding with the newly set deadline by Trump.

For the energy market and the cryptocurrency market, the fate of the Strait of Hormuz has become central to pricing. This global oil transportation "throat" accounts for about 20% of global energy flow. Iranian officials have made it clear that the Strait of Hormuz will not return to its pre-war state, and the energy market will remain unstable for a long time. The market reacted quickly: Brent crude oil continued to hover around $110, while WTI crude oil remained above $100. Market analysis from Wintermute pointed out that the news of the U.S. pausing strikes on Iranian energy infrastructure for five days temporarily reduced the geopolitical risk premium, leading to a drop in Brent crude prices, while Bitcoin rebounded above $70,000. However, whether this "easing" is a temporary window or a trap for escalation remains highly uncertain in the market.

II. The Fed's "Hawkish Claws" and the Shadow of Stagflation: A Significant Retreat in Rate Cut Expectations

As geopolitical disturbances intensified, the Federal Reserve's monetary policy stance further tightened macro liquidity expectations. In the early hours of March 19, Beijing time, the Fed announced the decision from its March meeting, keeping the policy rate unchanged at 3.5% to 3.75%, in line with market expectations. However, the dot plot released clear hawkish signals: among the 19 FOMC members, 7 expected no rate cuts in 2026, an increase of one from December last year; the number of members supporting more than one rate cut significantly decreased. The median forecast indicates that there may only be one rate cut in 2026, with another in 2027, ultimately stabilizing the rate at around 3.1% in the long term.

More notably, the Fed significantly raised its inflation expectations, increasing the PCE inflation rate for Q4 2026 from 2.4% to 2.7%, with core PCE also raised by 0.2 percentage points. This adjustment directly reflects the impact of the Middle East conflict on rising oil prices. Powell acknowledged at the press conference that "the rise in energy prices is directly affecting the central bank's outlook," emphasizing that "energy inflation cannot be recklessly ignored." He clearly stated that he would not consider rate cuts until there is progress in inflation. The committee has even begun discussing the possibility of further rate hikes, although this is not the baseline scenario for most officials.

Following the FOMC meeting, the U.S. March Purchasing Managers' Index (PMI) data released on March 24 further exacerbated market concerns about stagflation. The data showed that while U.S. business activity slowed, price pressures accelerated again—indicating a situation where weak economic growth coexists with persistent inflation. The market reacted negatively: the yield on 5-year Treasury bonds surged to a nine-month high of 4.10%, the Nasdaq Composite Index fell by 1.5%, and Bitcoin briefly dropped to $70,900. Even more concerning for the market was that futures in the bond market indicated that the implied probability of a Fed rate hike in July soared from nearly 0% a week prior to 20.5%.

This macro environment poses dual constraints on crypto assets. On one hand, the high interest rate environment suppresses the valuation expansion of risk assets; on the other hand, persistent inflation means the Fed has no room for easing. Powell specifically pointed out that the Middle East conflict poses downside risks to the economy and employment while presenting upside risks to inflation, creating a "dual tension" that puts monetary policy in a dilemma. For the crypto market, this means that in the short term, it is difficult to expect liquidity release from monetary policy, and the market must rely on endogenous forces and structural narratives to support prices.

III. The Diverging Paths of Institutional Funds: Bitcoin ETF Resilience vs. Ethereum's Dilemma

Against the backdrop of ongoing macro pressures, the flow of institutional funds has shown distinct divergence characteristics. According to data for the week ending March 22, U.S. Bitcoin spot ETFs recorded a net inflow of $93.1 million, maintaining positive inflows for the second consecutive week, with total assets under management reaching $90.3 billion. This data contrasts with previous market concerns—just in mid-March, Bitcoin ETFs experienced a single-day outflow of $708 million, the largest in two months. However, institutions did not withdraw; instead, they increased their allocations during market panic. BlackRock's IBIT saw a net inflow of $190 million in a single week, becoming the main contributor to inflows.

In stark contrast to Bitcoin, Ethereum spot ETFs recorded a net outflow of $60 million during the same period, with BlackRock's ETHA seeing an outflow of $69.6 million. This divergence in fund flows is directly reflected in price performance: Bitcoin rebounded to around $74,500 in late March, while Ethereum fell to around $2,180, with a weekly decline of 6%. Even more concerning is the leverage structure in the Ethereum market—according to CryptoQuant data, 75% of the Ethereum held by Binance is leveraged, making Ethereum particularly vulnerable to negative fund flows.

The differences in institutional preferences reflect two entirely different investment logics. Bitcoin is being viewed by institutions as an alternative to "digital gold" and a macro hedging tool, with its scarcity and post-halving supply-demand structure aligning more closely with traditional asset allocation logic. Morgan Stanley's Global Investment Committee even suggested that the allocation of crypto assets in model portfolios should not exceed 4%, while Bank of America supports a range of 1% to 4%. In contrast, Ethereum is more often seen as a "tech asset" or "beta asset," which tends to be hit hardest in environments of economic uncertainty and high interest rates.

Another noteworthy signal is that despite the continued net inflows into Bitcoin ETFs, market sentiment indicators are in a state of "extreme fear." Data compiled by Coinglass shows that for 25 of the past 30 days, market sentiment has been at "extreme fear" levels. This pattern of institutional buying coexisting with retail fear creates a typical "wall of worry." Apollo Crypto's research director Pratik Kala pointed out that "historically, these areas have always been excellent accumulation zones for Bitcoin." Institutional funds seem to be systematically accumulating amid market panic.

IV. Bitcoin's Macro Positioning: Risk Asset or Safe Haven Asset?

This round of geopolitical shocks provides a new testing ground for Bitcoin's asset attributes. Traditional logic suggests that geopolitical conflicts should drive funds toward safe-haven assets like gold and Bitcoin. However, the market performance following the escalation of the Middle East situation in March has overturned this narrative: gold experienced its largest weekly drop since 1983, falling over 10%, nearly erasing all gains for the year. Bitcoin also dropped to a two-week low of $67,371 during the Asian trading session on March 23, before rebounding on the news of the "postponement of strikes."

This synchronous decline reveals Bitcoin's current core positioning—it remains a risk asset rather than a mature safe haven asset. Haider Rafique, global managing partner at crypto exchange OKX, noted that "weeks of such extreme volatility often test the new narrative logic of Bitcoin as a 'novel safe haven,' especially as its price trend has been more aligned with risk assets recently rather than moving inversely." During the market turmoil in March, Bitcoin exhibited a clear positive correlation with U.S. stocks and Asian markets, contrasting with its ideal positioning as "digital gold."

However, compared to the stock market, Bitcoin still shows a degree of resilience. So far in March, Bitcoin has risen about 4%, while the Nasdaq index has fallen over 5%. This relative performance may stem from two factors: first, the continuous inflow of institutional funds provides price support; second, Bitcoin's supply-side structure (post-halving scarcity) and demand-side (institutional allocation through ETFs) create a unique micro foundation. In other words, Bitcoin's pricing is shifting from being purely macro-driven to a dual drive of "macro + institutional supply and demand."

Another key variable is the relationship between oil prices and Bitcoin. According to Wintermute's analytical framework, the navigation status of the Strait of Hormuz transmits to Bitcoin prices through oil prices. The logical chain is: blockage of the Strait of Hormuz → rise in oil prices → increase in inflation expectations → Fed maintains tightening → pressure on risk assets → Bitcoin declines. Therefore, following Trump's announcement of the "postponement of strikes," the drop in oil prices led to a rebound in Bitcoin, confirming this transmission mechanism. If oil prices stabilize around $100 rather than soaring further, Bitcoin may benefit from the "containment" of geopolitical risks.

V. Outlook: Three Paths and Key Observational Nodes

Considering the dual variables of geopolitical and macro liquidity, the crypto market may evolve along three scenario paths in the next 1-2 months, each corresponding to different price ranges and allocation strategies.

Scenario 1: Continued Easing, Oil Prices Stabilize. If Trump's "postponement of strikes" truly translates into a sustained diplomatic negotiation process, and navigation in the Strait of Hormuz gradually normalizes, Brent crude is expected to stabilize around $100. In this scenario, the geopolitical risk premium decreases, and the inflation pressure faced by the Fed marginally eases, providing breathing space for risk assets. Wintermute predicts that Bitcoin may test the resistance range of $74,000 to $76,000. If institutional buying momentum continues, it could even push Bitcoin to $80,000. Key observational nodes for this scenario include: the actions taken after U.S. military reinforcements arrive in the Middle East on March 27, whether the U.S. and Iran restart indirect negotiations, and whether U.S. gasoline prices retreat from the $4 high.

Scenario 2: Deterioration of the Situation, Escalation of Conflict. Trump's "stalling tactic" may simply be buying time for military action. If, upon the arrival of U.S. reinforcements by the March 27 deadline, stronger actions are taken, Iran may fulfill its threat to "block the Strait of Hormuz." In this scenario, oil prices could break through $120 or even surge to $140, sharply raising global inflation expectations, forcing the Fed to tighten monetary policy further. Bitcoin could fall back to the $65,000 range, or even test the psychological level of $60,000. In this scenario, the market would replay a "Black Monday"-style sell-off, with Bitcoin and risk assets moving in the same direction further reinforcing each other.

Scenario 3: Deepening Stagflation, Macro Dominates. Regardless of how the Middle East situation evolves, the stagflation characteristics already evident in the U.S. economy may become the dominant factor. March PMI data shows a coexistence of slowing growth and rising prices, while the Fed's dot plot indicates only one rate cut in 2026. If this "stagflation" pattern continues to deepen, the Fed may maintain rates unchanged throughout 2026 or even reconsider rate hikes. In this macro environment, Bitcoin will face dual pressures of valuation compression and tightening liquidity, but structural factors (halving effect, ETF channels, institutional allocation) may provide a hedge. The market will enter a tug-of-war phase of "macro pressure vs. institutional support," with volatility remaining high.

In terms of key observational nodes, investors need to closely monitor the following time points and indicators: first, the evolution of the situation after U.S. military reinforcements arrive in the Middle East on March 27, which is the first window to test the authenticity of Trump's "stalling tactic"; second, the weekly U.S. inflation data (CPI/PCE) and employment data to assess the evolution of stagflation pressures; third, the sustainability of fund flows into Bitcoin ETFs, particularly the inflow intensity of leading products like BlackRock's IBIT; fourth, the actual navigation status of the Strait of Hormuz and micro indicators like tanker premiums, which may reflect real risks better than official statements.

In summary, the crypto market in March 2026 stands at the crossroads of geopolitical and macro liquidity. The Trump administration's "stalling tactic" provides a brief window of respite for the market, but the divergence in positions between the U.S. and Iran indicates that the conflict is far from over. The Fed's hawkish stance and the shadow of stagflation continue to exert macro-level pressure. In such an environment, Bitcoin demonstrates unique resilience—continuous inflows of institutional funds are reshaping its supply-demand structure, allowing it to maintain relative strength among risk assets. However, it is still premature to assert that Bitcoin has evolved into a mature safe haven asset, as its synchronous movement with risk assets remains a primary feature in the short term. For investors, the key in the coming weeks will be to distinguish between "true easing" and "false stalling," seeking a balance between geopolitical risk premiums and macro liquidity. As Wintermute's analysis suggests, the fate of the Strait of Hormuz may well become the "compass" for Bitcoin's short-term price direction.