Recently, news emerged that Trump's team might engage in negotiations with Iran, which immediately caused a strong reaction in the encryption market.

If both parties can truly reach an agreement, the easing of the situation in the Middle East may have a negative impact on the encryption market:

Firstly, the demand for hedging will significantly decrease. Once the regional situation stabilizes, Bitcoin's hedging properties as "digital gold" will weaken, and short-term demand will inevitably be impacted.

Secondly, funds may shift significantly. Investors are likely to redirect their funds back to traditional risk assets, while the current encryption market is facing multiple challenges, including potential selling pressure from Mt. Gox, instability in ETF holdings, the risk of collapse of small-cap coins, and insufficient liquidity issues, making it difficult to withstand large-scale capital outflows.

Furthermore, the geopolitical premium will disappear. Once the price support from the tensions in the Middle East weakens, the important technical support levels for Bitcoin and Ethereum will be put to the test.

The small market cap encryption currency market has shown obvious turbulence, and investor panic is spreading.

Market volatility may intensify. Current market sentiment is already fragile, and any slight changes could trigger programmatic sell-offs, leading to more severe cascading effects.

Analyze several possible situations:

Successful negotiation (worst-case scenario): Demand for hedging disappears, compounded by internal industry issues, Bitcoin may fall to around $90,000, and small-cap coins continue to decline.

Negotiation failure (most favorable scenario): Regional tensions continue, market expectations for interest rate cuts rise, and Bitcoin is expected to rebound to over $110,000.

Negotiation stalemate (most likely scenario): Information is repeatedly changing, and the market will oscillate within a wide range. At this time, it is necessary to closely monitor the performance of Bitcoin's key support levels.

In this uncertain environment, investors need to remain rational and pay attention to the subtle relationship between political trends and market movements.