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Treasury yields dropped sharply after the Memorial Day weekend as traders priced in something that seemed unthinkable three months ago: a potential end to the US-Iran conflict.
The 10-year Treasury note yield fell between 6 and 9 basis points, settling in a range around 4.35% to 4.59%. That move, combined with a 6-8% plunge in oil prices, sent a clear signal that markets believe diplomacy might actually be gaining traction. For crypto investors, the spillover effect was immediate. Bitcoin rallied toward $82,000 as risk appetite surged across asset classes.
What’s driving the shift
The catalyst is straightforward. President Donald Trump indicated on Truth Social that negotiations with Iran had reached their final stages. Reports suggest the two sides are working through a one-page memorandum, with plans that include reopening the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world’s oil supply passes.
Iran’s foreign ministry confirmed it was actively reviewing the latest US proposal. That confirmation matters more than Trump’s posts alone, because it signals both sides are at least publicly acknowledging progress rather than posturing for domestic audiences.
The conflict, which began in late February, had been running for approximately three months by late May. During that window, military tensions around the Strait of Hormuz drove energy prices to multi-decade highs, fueling inflation fears that rippled through every corner of financial markets.
The military operation known as “Project Freedom” was reportedly paused as negotiations advanced.
Oil, bonds, and the inflation math
West Texas Intermediate and Brent crude both saw significant declines as peace talks advanced. For context, these benchmarks had been trading at levels that made every CPI print look threatening.
Prediction markets on Polymarket were pricing the odds of a near-term US-Iran deal at 37%.
What this means for crypto investors
Bitcoin’s push toward $82,000 wasn’t happening in isolation. Ethereum and altcoins rose alongside equities on the same de-escalation signals. This is the kind of correlated rally that tells you crypto is trading as a risk asset, not as a hedge against geopolitical chaos.
A 37% probability of a deal means there’s a 63% chance things don’t resolve cleanly. If talks stall or collapse, expect oil to spike, yields to climb, and risk assets, including Bitcoin, to give back recent gains in a hurry.
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