Author: Fiona Craig

Standard Chartered believes the worst of the current cryptocurrency downturn may already be over, arguing that Bitcoin (COIN:BTCUSD) established its cycle low when it briefly fell to $59,000, representing a 53% drop from its $126,000 peak.

According to Geoffrey Kendrick, the bank’s Global Head of Digital Assets Research, several near-term developments could help validate the view that the market is beginning a new recovery phase.

U.S.-Iran Developments and SpaceX Debut Could Shift Sentiment

Writing on Friday, Kendrick highlighted a potential peace agreement between the United States and Iran as one of the most important macroeconomic factors for crypto markets.

Should negotiations succeed, the agreement “may sound the end to higher oil prices and therefore higher UST yields,” he said.

The analyst also cited the IPO of SpaceX (NASDAQ:SPCX) as another potentially significant catalyst.

Kendrick suggested that many Bitcoin ETF investors have recently been selling positions to raise funds ahead of the landmark public offering, contributing to unusually large ETF outflows.

Those withdrawals have ranked among the biggest since spot Bitcoin ETFs were introduced.

Key Signals to Watch Next Week

Kendrick said several indicators would help confirm that Bitcoin has successfully established a bottom.

Among them are fresh Bitcoin purchases by Strategy (NASDAQ:MSTR), a return to positive ETF flows, and further declines in crude oil prices.

“Winter is over. Welcome back to crypto Spring,” he wrote.

Forecast for Bitcoin at $100,000 Remains Unchanged

The latest comments are consistent with Kendrick’s bullish outlook issued earlier this month.

At that time, he maintained his prediction that Bitcoin could reach $100,000 before the end of 2026.

“When we look back at the end of 2026 with bitcoin at $100k we will say this was the buying zone we all wanted,” he said.

Institutional Selling Still Weighs on Prices

Despite signs of stabilization, Bitcoin remains under pressure.

The digital asset has fallen by more than 50% since reaching its October high, even as the Trump administration has implemented a number of policies viewed as supportive of the cryptocurrency industry.

Bitcoin gained 0.9% on Friday to trade at $63,337.8 and was heading for a small weekly advance.

Nevertheless, that gain came after a sharp 17% decline during the previous week.

While confidence may be starting to improve, Bitcoin continues to hover near annual lows amid ongoing institutional selling through spot Bitcoin ETFs.

Recent Cocoa Price Recovery Draws Attention

Wells Fargo believes cocoa prices could remain supported by constrained inventories, even after the commodity retreated sharply from the extraordinary highs recorded over the past two years.

The bank noted that cocoa has recently regained momentum after falling from the record levels reached during the supply crisis. Prices had traded near $2,000-$3,000 per metric ton for years before surging to almost $13,000 per metric ton in early 2024.

While prices later eased back toward $3,000 per metric ton during late 2025, the market has shown signs of strengthening again in recent weeks.

Weather Conditions Could Tighten Supply Further

A major focus of Wells Fargo’s outlook is the potential return of El Niño.

NOAA currently estimates an 80% likelihood that the weather pattern will emerge this year. Historically, El Niño has been associated with weaker cocoa harvests due to hotter and drier conditions in producing regions.

Last week, Barry Callebaut said it is “watching the potential effect of El Niño,” while still forecasting a cocoa surplus for the current year.

Previous El Niño episodes coincided with meaningful disruptions to cocoa production, including during 2016 and 2024.

Stock Levels Could Reach New Lows

Wells Fargo estimates that a severe El Niño event could reduce worldwide cocoa output by a high-single-digit percentage.

Should that occur, global stock-to-grinding ratios could fall to roughly 23.8%, according to the bank’s calculations.

That would represent a new record low and fall below the previous trough of 26.5% recorded in 2024, reinforcing concerns about supply availability.

Mondelez Positioned to Benefit

Among consumer companies exposed to cocoa markets, Wells Fargo continues to favour Mondelez International (NASDAQ:MDLZ).

The bank forecasts that Mondelez’s cocoa costs could decline by approximately 37% in 2027 compared with the previous year, based on prevailing futures market curves.

If realised, those lower input costs could help strengthen profitability and provide a meaningful boost to margins.

More about Mondelez International

Mondelez International is a global snacks manufacturer with leading brands across chocolate, biscuits, gum and confectionery. Its portfolio includes Oreo, Cadbury, Toblerone, Milka and Ritz, making cocoa prices a key variable in the company’s long-term cost structure and earnings outlook.

Barclays believes Amazon’s satellite internet business still offers substantial upside potential, even as the company navigates a series of near-term obstacles that could slow deployment of its Leo network.

Formerly known as Project Kuiper, Amazon’s Leo low-Earth-orbit satellite constellation is approaching a major milestone that could allow the company to begin offering services to customers as early as the third quarter. Barclays analyst Ross Sandler and his team said the development “could be a small sentiment tailwind for AMZN.”

Even so, execution risks have increased. The latest setback came after an explosion during testing damaged the only launch facility currently available for Blue Origin’s New Glenn rocket, creating uncertainty around future launch schedules.

While Blue Origin has expressed confidence that operations could resume before year-end, some industry observers believe the recovery process could stretch beyond a year. That uncertainty leaves Amazon increasingly dependent on alternative launch providers to deploy satellites originally scheduled to fly aboard New Glenn.

The options are limited. United Launch Alliance’s Atlas V has only one remaining mission allocated to Amazon, while the company’s newer Vulcan Centaur rocket is still in the early stages of scaling operations after experiencing technical issues on two of its first four flights. Arianespace remains a potential partner but has yet to demonstrate a steady launch cadence.

According to Barclays, these launch-related constraints may weigh on Amazon’s second-quarter North American retail operating margin by approximately 125 basis points. The bank expects the impact to lessen later in the year as associated expenses begin to be capitalized. The earlier scheduling of Prime Day could also provide some financial offset.

Despite these challenges, Barclays remains optimistic about the long-term economics of the satellite connectivity industry and Amazon’s ability to establish a meaningful position within it.

“Connectivity is an enormous market that likely evolves into oligopoly-like structures with the industry leader way in front, but solid revenue opportunities for the second- and third-place companies,” the bank’s analysts wrote.

“Being second place in an enormous industry (satellite connectivity) is still a very attractive proposition for AMZN bulls,” they said.

The analysts expect Leo to offer competitive service quality from launch and believe Amazon’s enormous Prime ecosystem could accelerate customer adoption. Once the service becomes commercially available, subscriber growth could scale rapidly.

Barclays forecasts that Leo may generate annual revenue exceeding $10 billion by the end of the decade while achieving operating margins above 40%, making it a potentially significant contributor to Amazon’s future growth.

Citi expects lithium prices to find support after a prolonged decline, arguing that recent market weakness has largely been driven by growing GFEX inventories, improved supply dynamics and uncertainty surrounding near-term consumption trends.

The bank said the bulk of the price correction is likely already reflected in the market and anticipates a period of consolidation before a more positive pricing environment develops.

One of the key drivers identified by Citi is the likelihood of inventory rebuilding ahead of the industry’s usual August-September demand peak, which could stimulate buying activity and strengthen prices.

The firm also noted that additional export front-loading is expected to provide further support, helping to tighten market conditions and improve sentiment.

While Citi remains constructive on the outlook, it did not provide specific guidance on the duration of the consolidation phase or the timing of any future price recovery.

Bank of America strategist Michael Hartnett believes investors remain overwhelmingly optimistic despite long-term bond yields reaching 5%, although he cautions that several warning signs associated with the end of major bull markets are beginning to appear.

In his latest Flow Show publication, Hartnett identified three developments that have historically brought market booms to a close: rising bond yields that make capital more expensive, weakening performance among market leaders, and election-driven political pressure as voters demand lower inflation or stronger employment conditions.

“We’re getting there,” Hartnett wrote, “but for now asset allocation frozen bullish, positioned for late-cycle greed, not at all tempted by 5% yields at the long-end.”

Hartnett also drew comparisons with 1994, suggesting that year could offer valuable lessons for investors looking ahead to 2026.

At that time, an extended period of Federal Reserve accommodation and weak job creation came to an abrupt end when unexpectedly strong employment figures forced policymakers into a rapid tightening cycle.

Equity markets then spent months moving sideways before eventually stabilising after the Mexican peso crisis and Orange County bankruptcy halted the rise in bond yields.

Inflation Signals Flash Caution

According to Hartnett, U.S. inflation has averaged 0.5% month-over-month during the past six months, putting it on pace to move above 5% by the time midterm elections take place.

Meanwhile, unemployment remains at 4.3%, only slightly above the current CPI reading of 4.2%.

Historically, such a narrow gap between inflation and unemployment has often coincided with periods of aggressive Federal Reserve tightening, episodes that have rarely been favourable for financial markets.

Sell Signal Remains in Place

Bank of America’s Bull & Bear Indicator increased to 8.8 from 8.7, marking a fourth consecutive week in sell-signal territory.

Strong demand for technology investments continued to drive the indicator higher, partially offsetting outflows from both high-yield credit and emerging-market bond funds.

Technology Leads Equity Fund Flows

Global equity funds attracted $31.5 billion during the week ending June 10.

Technology funds accounted for a record $12.3 billion of those inflows.

The Direxion Daily S&P500 Bull 3X Shares ETF (AMEX:SOXL) attracted $3 billion, while the iShares Semiconductor ETF (NASDAQ:SOXX) drew $2.9 billion.

U.S. equities extended their inflow streak to 11 straight weeks, the strongest run since late 2025.

Emerging-market stocks also returned to favour, attracting $4.5 billion after experiencing eight weeks of outflows. South Korean equities led regional inflows with $5.9 billion, their largest intake since March.

Outflows Hit Crypto, Gold and Money Markets

Elsewhere, investor appetite weakened noticeably.

Cryptocurrency funds recorded a record $6.6 billion in outflows over the last five weeks.

Gold funds posted their fourth consecutive week of withdrawals, losing $2.3 billion, while money market funds experienced $2.5 billion of outflows.

The latest flow data indicates that investors remain committed to equities and growth assets despite elevated bond yields and inflation concerns, reinforcing Hartnett’s argument that bullish positioning remains deeply entrenched even as conditions become increasingly challenging.

Oil prices extended their decline on Friday after U.S. President Donald Trump abandoned plans for military strikes against Iran, easing concerns that tensions in the region could escalate further following reciprocal attacks earlier in the week.

At 0640 GMT, Brent crude futures were down $2.11, or 2.3%, at $88.27 per barrel, while U.S. West Texas Intermediate crude fell $1.90, or 2.2%, to $85.81 per barrel.

Diplomatic Progress Weighs on Crude Markets

The latest sell-off came after Trump indicated on Thursday that talks with Iran had advanced and that military action was no longer being considered for the time being.

The U.S. president suggested that a peace agreement capable of restoring shipping through the Strait of Hormuz could be signed as early as this weekend, although Iranian officials cautioned that discussions had not yet reached a final conclusion.

Tony Sycamore, market analyst at IG, said: “While this could, of course, be yet another false dawn, the market’s reaction has been both swift and decisive.”

He also noted that despite the recent decline in prices, “as long as the price can hold above support in the low $80s, the risks remain firmly skewed to the upside”.

Hormuz Shipping Situation Remains Uncertain

The Strait of Hormuz continues to be a focal point for energy markets given its importance to global oil and gas flows.

Iran announced on Thursday “the closure” of the waterway, where vessel movements had already been heavily restricted for several months. Authorities in Tehran warned that any ship attempting to navigate the passage could come under fire.

Under normal conditions, roughly 20% of global oil and liquefied natural gas exports pass through the strait, making any disruption highly significant for international energy supplies.

Iranian state media reported on Friday that the country’s forces had stopped a tanker from crossing the strait without prior approval.

Meanwhile, the U.S. military stated on social media that commercial shipping traffic was continuing through the route.

Analysts Warn Against Assuming the Crisis Is Over

Despite the optimism surrounding the latest diplomatic developments, analysts stressed that the situation remains fragile.

In a research note published on Friday, ING analysts wrote: “We would be cautious about assuming that the extension of the ceasefire is a done deal. Even if it is, it could be fragile. And clearly, if nuclear talks do not progress, it could very easily fall apart.”

The bank also highlighted the risk that continued restrictions on oil shipments could tighten the market considerably over the coming weeks.

“We believe the market reaches an inflection point in late July if we do not see oil flows resuming before then. This is when inventory levels and seasonally stronger demand push prices significantly higher towards $120-130 per barrel.”

OPEC Lowers 2026 Demand Growth Forecast

Separately, the Organization of the Petroleum Exporting Countries revised its outlook for oil demand growth next year.

The group cut its forecast for 2026 global oil demand growth to 970,000 barrels per day, down from a previous projection of 1.17 million barrels per day, marking a second consecutive downgrade.

At the same time, OPEC adopted a more optimistic view of longer-term demand trends and increased its growth forecast for 2027.

The producer alliance now expects worldwide oil demand to rise by 1.73 million barrels per day in 2027, representing an upward revision of 190,000 barrels per day from its earlier estimate.

Traders Continue to Balance Fundamentals and Geopolitics

While weaker demand expectations have contributed to the recent decline in crude prices, geopolitical developments remain the dominant driver of market sentiment.

Hopes that Washington and Tehran can reach a diplomatic resolution have helped ease immediate concerns over supply disruptions. However, uncertainty surrounding the Strait of Hormuz and the future of nuclear negotiations means energy markets remain vulnerable to renewed price swings in the weeks ahead.

Gold prices moved modestly higher on Friday, although the precious metal remained on course for a weekly decline as investors assessed the likelihood of a diplomatic agreement between the United States and Iran and the implications for inflation and monetary policy.

By 05:29 ET (09:29 GMT), spot gold had gained 0.2% to $4,220.27 per ounce. Despite the uptick, bullion was still set to end the week more than 2% lower. Gold futures rose 3.1% to $4,241.51 per ounce.

Diplomatic Developments Ease Energy Market Concerns

Reports from Iranian state media indicated that a prospective agreement between Tehran and Washington could include the reopening of the Strait of Hormuz and the removal of U.S. sanctions on Iranian oil exports.

According to Iran’s Mehr news agency, the proposed Memorandum of Understanding would also provide for the release of Iranian assets currently frozen abroad. The report noted that negotiations remain focused on economic and nuclear matters, while discussions surrounding Iran’s missile programme would not form part of the agreement.

The proposal still requires approval from the relevant authorities before any final deal can be completed.

Oil Retreats as Traders Price in Reduced Supply Risks

Crude oil prices fell sharply as markets responded to signs of progress in negotiations.

Brent crude, the international benchmark, declined 4.3% to $86.47 per barrel after slipping below the $90 mark on Thursday.

The move followed comments from U.S. President Donald Trump suggesting that an agreement to end the conflict with Iran, now in its fourth month, could be within reach.

While oil remains considerably higher than levels seen before the outbreak of hostilities, a sustained decline in crude prices could help alleviate fears that rising energy costs will fuel inflation and prompt additional monetary tightening by central banks.

Such an environment is typically less supportive for gold, which does not generate interest income.

Markets Continue to Focus on Federal Reserve Policy

Attention also remains firmly fixed on the Federal Reserve.

The U.S. central bank is widely expected to leave interest rates unchanged at next week’s meeting. However, investors continue to anticipate at least one additional rate increase before the end of the year.

Expectations that policymakers would begin cutting rates during 2026 have largely faded as inflation remains elevated and economic activity continues to show resilience.

Analysts at UBS said: “We are lowering our forecasts to reflect the expected delayed start of Fed rate cuts to 2027 and the resulting reduction in expected ETF gold demand in 2026. The environment for the yellow metal will likely remain challenging in the near term, but we continue to see a constructive outlook over the medium term as Fed rate cuts moderate real rates and the U.S. dollar.”

ECB Rate Increase Adds Another Headwind

The outlook for gold has also been affected by developments in Europe.

Earlier this week, the European Central Bank became the first major central bank to raise interest rates in response to inflationary pressures linked to the conflict in Iran.

Officials stressed the need to contain rising prices, reinforcing expectations that borrowing costs could remain elevated for an extended period.

Softer Dollar Helps Limit Losses

Despite the broader challenges, a weaker U.S. dollar provided some support for gold prices.

A softer dollar generally improves the attractiveness of bullion for international buyers by reducing its cost in other currencies.

Throughout much of the conflict, the dollar has benefited from safe-haven demand and the perception that the U.S. economy, as a major energy exporter, is better positioned than many other countries to withstand prolonged disruptions in energy markets.

Friday’s decline in the currency, however, helped offset some of the pressure on precious metals and contributed to gold’s modest advance.