Bitcoin recovers above $63,500 as US-Iran ceasefire extension lifts risk appetite

Bitcoin's recovery above $63,500 hinges on whether Middle East de-escalation can reverse weeks of institutional outflows.

Bitcoin climbed above $63,500 on Aug. 17 as the US and Iran agreed to extend their ceasefire, easing the geopolitical risk premium that had weighed on crypto since the Strait of Hormuz blockade.

"The ceasefire extension removes a key overhang that had kept risk assets pinned," Frederik Theissen, an analyst at Glassnode, said.

The recovery follows a stretch of heavy selling. Spot Bitcoin ETFs bled about $390 million in the week to Aug. 14, their heaviest weekly outflow since early July, while wallets holding 1,000+ BTC thinned from a July 31 peak near 1,963 as Brent crude pushed above $88 a barrel.

Traders now watch $65,500 as the first resistance, with the Short-Term Holder Cost Basis near $68,700 marking the next supply zone. A close below $63,000, the Median Realized Price, would reopen the path toward June lows near $58,500.

Ceasefire Extension Eases the Inflation Overhang

The transmission chain runs through inflation. The Middle East ships close to a quarter of the world's urea through Hormuz, and JPMorgan flagged that nitrogen fertilizer benchmarks jumped 25 to 50 percent after the conflict began. Sticky energy and food costs give the Federal Reserve reason to keep rates high, and high rates drain the cheap liquidity that risk assets lean on. The ceasefire extension, if it holds, removes that pressure at the source.

Weak Spot Demand Caps the Upside

Yet the recovery has not drawn buyers back. The Coinbase Premium Index sits at negative 0.1 percent, mostly negative since May, pointing to limited buying pressure from US investors. Bitcoin's supply in profit has fallen to 51.4 percent, with 48.6 percent of circulating supply held at an unrealized loss, the lowest level since 2023. Spot trading volume has hit its lowest since 2019, and futures open interest has grown to exceed an entire day of futures volume, leaving leveraged longs exposed if the range breaks.

The ceasefire extension gives Bitcoin room to test $65,500, but the market needs spot demand to return before a sustained move higher. Without it, the leveraged positioning built on Hyperliquid, net long every day since mid-March, leaves the market vulnerable to a sharp unwind toward the June lows.

This article is for informational purposes only and does not constitute investment advice.