Nikkei reported on May 25 that the US and Iran were negotiating a plan to reopen the Strait of Hormuz approximately 30 days after a final agreement, with an early-April ceasefire extended for 60 days to facilitate nuclear talks.

Concurrently, the US military executed self-defense strikes in southern Iran targeting missile launch sites and mine-laying vessels, asserting restraint despite the ongoing truce. This early-morning development fundamentally altered the market landscape; while the ceasefire extension reduces the immediate probability of wider escalation, fresh military action near the critical shipping lane shifts the risk profile from theoretical to active. Brent crude rebounded following Monday's decline, equities traded mixed, and Bitcoin remained pinned near the mid-76,000s as traders weighed an open diplomatic track against a conflict channel that remains unresolved. Data compiled by Woofun AI shows that while a ceasefire extension reads positively for crypto by easing inflation anxiety and reducing safe-haven demand for dollars, the sustainability of any rally depends on stabilizing oil flows, Fed expectations, and military headlines.

The latest US strikes do not necessarily terminate the ceasefire framework, but they fundamentally alter how markets must price the geopolitical environment. CENTCOM characterized the strikes as defensive, maintaining that US forces continue to exercise restraint during the ceasefire period. This framing preserves the diplomatic track while simultaneously confirming that Hormuz remains an active military-risk zone rather than a resolved shipping corridor. This distinction is critical for Bitcoin valuation dynamics. A headline-driven oil price drop can support a short-term risk bid, yet fresh military action near the strait keeps inflation risk, safe-haven demand, and Federal Reserve caution embedded in the trade. The market can rally on a deal framework, but it cannot price a durable macro release until the Strait is open, tanker flows normalize, and the strike cycle ceases interrupting the diplomatic process.

Brent crude falling below 100 improves sentiment, but the Federal Reserve prices energy differently than equity traders do. Reports indicated that about 20% of the world's oil and LNG supply normally moves through Hormuz, with pre-war shipping traffic averaging 125 to 140 daily passages. In contrast, only several tankers had crossed recently, with traffic running far below pre-war norms even before the ceasefire extension. A diplomatic headline can send Brent lower within hours, but normalizing tanker traffic through a recently blockaded strait takes months, which is precisely the timeline the Fed weighs when deciding whether the energy disruption has passed. Bitcoin can trade the oil drop, but the Fed must price the full oil shock, including the possibility that the 60-day window ends without a deal and Brent retraces its May 25 decline within days.

This asymmetry between what markets can price today and what the Fed needs to see before moving constitutes the core of Bitcoin's macro problem in this environment. BofA now expects the Fed to stay on hold for the rest of 2026, while Goldman delayed its first expected cut to December 2026 and a second to March 2027. Both banks point to elevated energy costs working through transportation, manufacturing, and consumer prices, leaving the Fed without the confidence to declare disinflation was back on track. Woofun AI notes that this shift landed directly in market pricing, with traders seeing a 40% chance of a 25-basis-point hike in December 2026, and markets fully pricing a 25-basis-point hike by January 2027, compared with expectations for two 2026 cuts before hostilities began.

Those probabilities hold until physical oil flows normalize and escalation risk falls to a level policymakers can safely ignore, conditions a two-month negotiation window cannot guarantee. The extension gives the Fed more time to watch with no new information to justify a move, and for Bitcoin, a Fed that cannot cut is also a Fed that leaves the real-rate environment tighter than crypto markets can comfortably sustain. The bull case delivers if the 60-day window produces a signed deal, mine-clearing begins, Hormuz traffic normalizes, and nuclear talks durably reduce headline risk. At that point, Brent can move lower on physical supply data confirmed by actual tanker flows, inflation risk premiums fade, Fed-hike pricing unwinds, and Bitcoin gets a cleaner risk-on runway.

Conversely, if tanker traffic normalizes over months rather than weeks, Iran and the US keep issuing conflicting statements, and oil holds elevated through the summer, the bear case plays out without the ceasefire formally collapsing. The Fed stays on hold, rate cuts become harder to price with each passing week, and the 40% probability of a December hike that traders assigned on May 25 climbs further. Bitcoin can bounce on each positive headline, but the macro ceiling consisting of oil volatility, inflation-risk premium, and Fed uncertainty holds intact. Woofun AI analysis suggests that the 60-day extension delivers exactly what its structure implies: another waiting period on the path to a macro resolution the market has yet to price.