Brent crude prices plunged 7% after the U.S. and Iran paused strikes around the Strait of Hormuz, improving sentiment across risk assets and supporting equities and DeFi tokens. Meanwhile, bitcoin remained close to $65,000 as traders awaited Wednesday’s Federal Reserve rate decision.

Crypto markets started the week higher as easing tensions in the Middle East provided temporary relief for investors. The pause in U.S.-Iran military actions around the Strait of Hormuz sent Brent crude sharply lower, with prices falling from above $100 to nearly $87 per barrel as diplomatic efforts continued.

The impact spread across global markets. Nasdaq 100 and S&P 500 futures advanced 1.36% and 0.80%, respectively, while gold and silver gained as inflation concerns linked to higher energy prices began to fade. The CoinDesk 20 Index (CD20) rose 0.1% since midnight UTC and was up 1.6% over the previous 24 hours.

Bitcoin (BTC) traded around $65,200, slightly lower from midnight levels, after briefly touching $65,600 when futures markets opened on Sunday. Although the price change was limited, improving sentiment suggested stronger underlying demand.

Ether (ETH) continued to outperform bitcoin, climbing 0.51% to roughly $1,963 and moving closer to the key $2,000 level for the first time since early June.

The Federal Reserve meeting remains the week’s biggest macro event, with policymakers deciding whether to raise interest rates for the first time in three years. Inflation has climbed to 4.1% following the oil price surge triggered by the Iran conflict.

However, falling crude prices have reduced expectations for a rate increase. CME Group’s FedWatch tool now shows a 30.5% chance of a hike on Wednesday, down from 37.4% at Friday’s close.

Derivatives Market Update

Bitcoin rebound puts pressure on shorts:
Bitcoin’s recovery above $64,000 has forced bearish traders to close positions. Futures data showed that short positions represented the majority of the $312 million in liquidations recorded over the last 24 hours.

Futures traders remain on the sidelines:
Despite the spot market recovery, derivatives traders have not fully increased exposure. Bitcoin futures open interest declined to about 740,000 BTC after exceeding 760,000 BTC on Friday. Still, positive funding rates and favorable 24-hour cumulative volume delta (CVD) figures suggest a continued bullish bias among traders.

ETH derivatives support continued rally:
Ether’s recent strength against bitcoin has continued since the June 6 market bottom, with futures data reinforcing the trend.

ETH futures open interest climbed to 14.66 million ETH, the highest level since June 7. Positive funding rates and strong OI-adjusted CVD readings indicate that buyers are actively driving price action through market orders.

Open interest movements:
XLM, LTC, and XMR recorded increases in open interest, while SHIB and AVAX saw capital leave their derivatives markets.

Market-wide momentum remains uncertain:
Despite gains in some cryptocurrencies, broader market indicators remain cautious. Only TRX and BNB showed positive 24-hour CVD readings among major tokens, while most large-cap cryptocurrencies recorded negative flows, suggesting continued selling pressure.

Volatility remains contained:
Bitcoin’s 30-day implied volatility index (BVIV) stayed near 40%, slightly above its recent two-month low around 38%, indicating calmer market conditions. Ether’s implied volatility index (EVIV) showed a similar pattern.

Options sentiment improves gradually:
BTC options on Deribit continue to show stronger demand for puts than calls, signaling continued interest in downside protection. However, the one-week put-call skew declined to 9% from nearly 13% on Friday, suggesting that bearish positioning is easing. ETH options show a much smaller skew, reflecting more balanced market expectations.

Token Market Update

DeFi tokens were among Monday’s top performers, with Aave (AAVE) gaining 9%, Lido (LDO) rising 9.4%, and Ondo (ONDO) adding 7% as its recent rally continued.

Lighter (LIT) recovered after several days of profit-taking, increasing 4.71% since midnight UTC and 8.91% over 24 hours. The rebound suggests selling pressure may have weakened near the $2.13 level.

PUMP was the strongest performer of the day, climbing 12% over 24 hours as speculative demand pushed its market capitalization toward $800 million, up from around $570 million two weeks earlier.

Zcash (ZEC) lagged behind the broader market, falling 1.95% to $497 as the privacy-focused token surrendered some recent gains. Monero (XMR) also declined 1.24% amid weakness across privacy-related cryptocurrencies.

CoinMarketCap’s Altcoin Season Index increased to 55/100, while the average Relative Strength Index (RSI) recovered to 51.88, suggesting crypto market sentiment is gradually improving.