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Soaring oil prices fed upside inflation risks, which sent the US dollar (DXY index) to a one-year high that weighed down EM assets and precious metals.
Yet, US equities, and even cryptos, remained resilient throughout the conflict.
Ironically, Bitcoin however tumbled, even as the conflict moved towards the ceasefire off-ramp.
By late-June, the world’s biggest crypto had posted its lowest levels in nearly 2 years (since September 2024).
At the time of writing, Bitcoin remains over 50% below its all-time high, creating a larger gap below the psychological $60k level.
It was a period to forget for crypto bulls, as 1H26 also featured these dramatic declines:
To be sure, broader risk sentiment had to endure some rough patches in the first half of the year.
Valuation fears surrounding mega-cap tech and AI-linked stocks triggered episodes of de-risking out of US equities.
Yet, stocks have been able to rebound back towards record highs.
On the other hand, cryptos were further plagued by idiosyncratic factors, including the symbolic 32 BTC sale by Strategy - the largest Bitcoin digital asset treasury firm, that heaped more downward pressure on this asset class.
READ MORE (published June 2nd): Bitcoin sinks below $70k for first time in 2 months! Here's why.
Crypto’s underperformance relative to a basket of macro assets is best seen below:
The aggressive spot price selloffs have had a notable impact on options markets.
BTC’s at-the-money implied volatility, a forward-looking measure of the expected volatility of an asset over a specific period of time, jumped towards 103% in early February — matching levels seen during November 2022.
That jump in forward-looking volatility expectations was at least partly driven by realized volatility — the volatility delivered by spot prices jumping to levels last seen in March 2025 during the US tariff saga.
Subsequent events in the year, such as the US-Iran conflict and Strategy’s Bitcoin sale did not see volatility spike as high, though nonetheless punctuated periods of sideways volatility, when markets expected quieter times ahead (such as the May year-to-date low in ATM IV).
For most of the year, in options markets, downside protection has been priced at a significant implied volatility premium to OTM calls — brief periods of spot recovery have been unable to drive a meaningful skew back towards call options.
While the rout in digital assets has, for the most part, been broad-based, specific segments of the market have outperformed.
In our outlook report for 2026 (published Jan 5th), we argued:
“We will see a further flight to fundamental value: altcoins with their own regulatory wrapper and those with innovative ecosystems that stand to gain the most from continued regulatory friendliness are likely to see inflows, creating a further bifurcated market.”
One asset in particular which fits that description is Hyperliquid’s native HYPE token — which is up over 150% year-to-date.
HYPE has been supported by a number of factors:
Since launch on June 1, 2026, have seen $189M in net inflows.
That’s equivalent to 1.35% of HYPE’s total market cap, compared to other altcoin ETFs such as XRP spot ETFs which hold 2.1% of XRP’s total market cap and spot Solana ETFs which hold 2.8% of SOL’s total market cap
Rising protocol volumes have directly translated into higher fee generation which has been used to support token buybacks.
Hyperliquid’s buyback assistance program allocates 97% of protocol revenue towards repurchasing HYPE tokens.
Also, TRON is ending 1H26 with a year-to-date gain of about 12%.
TRON has outperformed many major cryptocurrencies in the first half of 2026 as investors reward its real-world utility.
The network remains a leading blockchain for USDT (Tether) transfers, processing enormous volumes of low-cost stablecoin payments that generate consistent on-chain activity and protocol revenue.
READ MORE (published June 5th): TRON hits downside target; HYPE hits new record high!
Currently, markets fully expect at least one Fed rate hike by end-2026, with another 1-in-3 chance of a 2nd Fed rate hike in 2H26.
Fed monetary policy is set to have a significant impact on price action in the months ahead.
The lack of forward guidance could see more volatility on FOMC meet days.
Any follow-through on the implied hawkish tilt (i.e. rate hikes) and reiterated dedication to the inflation mandate could potentially act as a headwind for risk-on assets, including crypto.
READ MORE (published June 18): 5 key takeaways from the “new” Fed
Seasonal patterns suggest fiscal support has tended to increase around mid-term election cycles and has historically been supportive of risk-on assets.
Though it remains to be seen however if a potential reduction in the Fed’s balance sheet as Warsh has advocated will shift more focus to the fiscal policy of the US Treasury.
Still, markets stand ready to price in the election outcomes, and whether it results in a more crypto-friendly Congress or not.
Further developments in the US regulatory environment certainly warrants vigilance among the crypto community, especially around the CLARITY Act - the most comprehensive US crypto market-structure bill ever to clear a chamber of Congress.
Regulatory developments have long played an important role in shaping sentiment across crypto markets, often becoming the dominant narrative as they unfold.
Although final passage in both chambers is being pencilled in for September or later, it remains to be seen whether crypto prices will have enough momentum then, or attention bandwidth even, to react to such major progress for the industry.
READ MORE (published May 13th): CLARITY Act "markup" - what you need to know
DISCLAIMER:
This article is provided for general information and reflects the author’s views only. It does not constitute investment advice, nor an offer or solicitation to buy or sell any financial instruments or digital assets. Your ability to access or use any products or services mentioned may be subject to the laws and regulatory requirements of your jurisdiction.