Macro Is in Control: Oil, Fed Pressure, and Crypto Volatility

Macro factors are driving the market right now, mainly through oil prices, Fed policy, and crypto volatility.

First, the conflict involving Iran is disrupting the Strait of Hormuz, pushing Brent crude prices up by over 60%. If the disruption lasts until mid-April, the supply shortfall could reach about 10 million barrels per day. This is boosting energy stocks, while most other assets face downward pressure.

Second, inflation and Federal Reserve actions are key. March’s CPI is expected to show a sharp rise. The market no longer expects rate cuts in 2026; some even anticipate a hike. The Fed is in a tough spot—cutting rates might worsen inflation, while raising them could hurt an already weakening labor market. Growth and tech stocks are seeing the biggest declines.

Third, AI-related spending by big tech firms is increasing for 2026, yet their stock prices keep falling. This suggests the selloff is driven more by macroeconomic concerns than by weak fundamentals. If geopolitical tensions ease, tech could rebound fairly quickly.

These significant economic forces are also impacting crypto markets rapidly. Headlines cause swift price swings and liquidations. Earlier this week, hopes for a ceasefire pushed Bitcoin above $68,500. When tensions escalated, BTC dropped near $66,500. At the same time, oil jumped over 5% past $106, triggering over $400 million in liquidations mostly on long crypto positions.

Looking ahead to Q2, even with easing tensions, any recovery is unlikely to be smooth because sentiment remains fragile. The Crypto Fear & Greed Index holds around 27, and the VIX volatility index has stayed above 25 after peaking near 35. Markets have been very reactive to news, and this behavior tends to persist.

Several key risks remain: high oil prices could cause stagflation, AI stocks need stronger growth, potential changes in Fed leadership, upcoming elections, trade tensions, private credit weakness, slower growth in China, and rising Japanese yields alongside a weaker yen.

The main advice is not to try timing the market bottom but to focus on positioning. In crypto, capital is flowing into Bitcoin, with dominance near 58%, reflecting a move toward safer, more liquid assets.

Right now, the main driver is clear: macro dynamics push oil prices, and oil prices influence crypto.

Next week will be critical. The April 6 deadline for Iran, negotiations from April 7 to 10, FOMC minutes on April 8, and CPI data on April 10 will shape the market.

If tensions cool and oil falls below $90, markets could bounce back quickly. But if oil stays high and inflation rises, rate cuts will likely be delayed, prolonging pressure on stocks and crypto.

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