Bitcoin Gains Momentum After US-Iran Truce, but Risks Still Remain

Bitcoin has stabilized following a sharp early-June decline, though market analysts remain cautious about the strength of the recovery. Undoubtedly, it still shows signs of weakness, and geopolitical developments remain a major source of uncertainty.

The world's largest cryptocurrency recovered sharply after falling below $60,000 earlier this month, benefiting from a broader improvement in risk appetite following reports of a diplomatic breakthrough between the United States and Iran. However, the rally may struggle to sustain itself without stronger participation from buyers and improving blockchain activity.

Geopolitics Remain a Key Driver

According to Nick Ruck, Director at LVRG Research, Bitcoin's recent gains remain heavily influenced by macroeconomic and geopolitical developments rather than underlying market strength.

Ruck noted that trading activity and blockchain-based indicators have yet to confirm a convincing recovery, suggesting the current rebound could remain vulnerable to sudden reversals.

He added that the recently announced agreement between Washington and Tehran could play a significant role in determining Bitcoin's near-term direction. Any disruption to the diplomatic process, he warned, could trigger renewed volatility across global financial markets.

Should tensions escalate again, Bitcoin could initially attract demand as investors seek alternative assets. However, broader risk-off sentiment and potential energy market disruptions could ultimately weigh on cryptocurrency prices alongside other risk assets.

US-Iran Agreement Boosted Risk Sentiment

Bitcoin's recovery followed comments from US President Donald Trump, who announced that the United States and Iran had reached a peace agreement aimed at ending months of regional tensions.

According to details released so far, the agreement is expected to keep the Strait of Hormuz open while paving the way for negotiations regarding Iran's nuclear program and potential sanctions relief.

The prospect of reduced geopolitical risk helped improve sentiment across financial markets, supporting gains in equities, commodities, and digital assets.

Nevertheless, investors remain cautious as many aspects of the agreement have yet to be finalized and negotiations are expected to continue in the coming weeks.

On-Chain Indicators Still Show Weakness

While Bitcoin's price has partially recovered, several market indicators suggest the underlying trend remains less convincing.

Blockchain analytics firm Swissblock, according to Cointelegraph, reported that both Bitcoin's price momentum and On-Balance Volume (OBV) remain in what it described as a weak participation environment.

Price momentum, which measures the strength of market movements, remains in negative territory despite the recent rebound. Meanwhile, OBV, an indicator used to track buying and selling pressure, continues to hover near multi-year lows.

The combination suggests that recent gains have not yet been accompanied by a meaningful return of market participation or sustained buying activity.

According to Swissblock, historical market cycles often show weakening momentum and declining volume before deeper price corrections occur.

Recovery Still Requires Confirmation

Analysts note that stronger bullish signals typically emerge when both momentum indicators and trading participation return to positive territory simultaneously.

Until that happens, the possibility of another test of recent lows cannot be ruled out.

In fact, Bitcoin showed signs of losing momentum after its recent rebound, retreating from Monday's highs as traders assessed both geopolitical developments and broader market conditions.

For now, the cryptocurrency appears caught between improving macro sentiment and lingering concerns about the strength of the recovery itself.