Wintermute: Despite a brief rebound on Monday, the market remains fragile, so caution is advised

March 3rd — Wintermute released a market update noting Iran’s geopolitical tensions have driven significant volatility in risk assets. For crypto: The weekend downturn absorbed the first wave of geopolitical panic, while the rebound stemmed from the market’s belief that Bitcoin’s 45% pullback from its all-time high has already absorbed most losses. However, the energy factor remains underestimated: Sustained high oil prices could keep inflation elevated — a setback for global central banks that had hoped for cooling inflation, potentially delaying Fed rate cuts. Crypto is at a disadvantage in this dynamic. Though ETF inflows have picked up recently, institutional participation is now far lower than during the $85k–$95k range seen between November 2023 and September 2024. Back then, institutions traded actively (especially on dips); today, buying interest is scarce, leaving the market fragile. Altcoins are tracking the typical bear market playbook: Positive moves are short-lived, investors lack willingness to chase alpha, and most are unlikely to see sustained uptrends. Wintermute’s assessment: Despite a brief crypto rebound on Monday, the market remains fragile and volatility is rising again. With the growth risk premium climbing and the Fed unable to intervene, crypto — a high-beta growth asset — stays under pressure. ETF outflows (now temporarily paused) confirm this trend. Advice: Wintermute urges investors to exercise caution. The market is focused on conflict news, particularly updates on the Strait of Hormuz reopening or de-escalation of tensions. If the conflict drags on longer than expected, higher energy costs could reshape rate expectations and pressure broad risk assets.