Crypto shows resilience in March as oil-driven macro shocks reshape market dynamics

Grayscale noted the crypto market showed surprising resilience in March, despite peak uncertainty. In the past month, oil futures on HIP-3 have emerged as the newest liquidity hot spot, rising from near zero to new records each day. 

The crypto market held up in March, but it is still a long way from recovery, according to Grayscale’s analysis. BTC had a small 1.81% net monthly return in March, rallying at the last moment to avoid a six-month losing streak. 

In the background, the market achieved new regulatory milestones as the US Securities and Exchange Commission issued rulings on the status of multiple crypto assets under securities law. 

The past month was marked by the rise of oil markets on Hyperliquid, which accelerated from near-zero activity. 

Crypto markets are pressured by the war in Iran

According to Grayscale, the war in Iran was the main market development for crypto and other assets. The main factor was the secondary oil price shock, which led to a 63% rise in oil prices per barrel. Higher oil prices sparked concerns about inflation and predictions of a more hawkish interest rate policy across major economies. 

Gold, equity indexes, bonds, and silver all moved lower. In this climate, BTC was still not a convincing alternative, as the coin hovered below $70,000. 

As a result, crypto assets held within their usual range, without dramatic recoveries. BTC got a boost from Strategy’s purchases, adding 44.4K to its treasury. ETH held above $2,000, but remained shaky as open interest was low. Grayscale’s crypto index had a minimal net gain in March. 

Perpetual futures turned into the best performer in the past month

The best-performing sector in March was traditional assets with on-chain representation, led by Hyperliquid’s perpetual futures. The platform’s growth was driven by HIP-3 contracts, as Trade.XYZ added an S&P 500 contract in partnership with S&P Dow Jones Indices. 

Oil futures peaked on March 23, but Brent and WTI CL remain the busiest contracts on HIP-3. Hyperliquid also awaits increased open interest and trading with the HIP-4 upgrade. 

Oil also attracted a notable short position from Abraxas Capital. The fund retains its main short positions, despite the recent oil spike above $100.

The perpetual futures oil market closely tracks developments in the Strait of Hormuz for signs of relief from the oil supply disruptions. As a result, HIP-3 makes up to 40% of Hyperliquid activity, displacing other crypto markets. 

Brent open interest reached a peak of $1.5B in March, later retreating to around $400M after liquidations and closed positions. WTI oil held around $400M in open interest. The two contracts emerged from a top 10 asset to the most actively traded on HIP-3 in March.

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