The crypto market, U.S. equities and precious metals all tumbled on Tuesday as the dollar index (DXY) rose by 0.5% since midnight UTC to its highest level since Jan. 19.

The risk-off sentiment comes after escalation in the conflict in Iran, with Israel launching fresh strikes on Tehran and Beirut while the U.S. embassy in Riyadh was hit by two Iranian drones.

Gold hit a one-month high of $5,410 on Monday but fell back to $5,260 on Tuesday as investors opt for the dollar as a safe haven.

Bitcoin BTC$67,035.11 has been largely correlated with gold this week; rallying on Monday to $70,000 before reverting back to $66,500 - firmly in the middle of a range it has occupied since early February.

The altcoin market fared worse than bitcoin, with the likes of ADA, ZEC and DASH losing upwards of 4% since midnight UTC.

Derivatives positioning

• Market dynamics have transitioned into a consolidation phase, with BTC futures open Interest stabilizing at $15.3 billion as the post-leverage cleanup reaches equilibrium. Retail sentiment remains cautiously bullish with funding rates ranging from 0% to 10%, while institutional conviction has softened slightly, marked by the 3-month annualized basis dipping just below 3%. This suggests a firm market floor but a temporary plateau in upside momentum.
• The options market has shifted from "panic-hedging" to sustained bullishness, with 24 hour call volume surging to a 63/37 split. The 1-week 25-delta skew has cooled to 14% (down from 27%), signaling a sharp drop in the cost of downside protection. Crucially, the implied volatility (IV) term structure has moved into contango, as front-end premiums collapse below the stable 49%–50% seen in longer-dated tenors, indicating that immediate fear has been replaced by mid-term growth expectations.
• Coinglass data shows $392 million in 24 hour liquidations, with a 50-50 split between longs and shorts. BTC ($163 million), ETH ($96 million) and Others ($20 million) were the leaders in terms of notional liquidations. Binance liquidation heatmap indicates $69,800 as a core liquidation level to monitor, in case of a price rise.

Token talk

• CoinDesk's Memecoin (CDMEME) and DeFi Select (DFX) Indices are the best performing benchmarks over the past 24 hours, rising 0.95% and 0.71% respectively.
• AI token NEAR bounced back from oversold conditions with a 13.3% move to the upside on Tuesday, indicating that portions of the altcoin market remained coiled ready to spring to the upside.
• Broadly, however, the altcoin market remains in a consolidation phase as a part of a downtrend dating back to October. Over the past week the likes of PEPE, ATOM, SHIB and BCH have all lost double digits despite bitcoin remaining in the middle of its trading range.
• DeFi tokens JUP and MORPHO bucked the consolidation trend, rising by 23% and 20% respectively over the past week with continuation to the upside on Tuesday.