Investors flock to traditional safe-havens and digital assets alike as diplomatic breakthroughs with Iran boost market sentiment

A significant shift in the $31 trillion Treasuries market occurred after President Donald Trump revealed that negotiations between the US and Iran were nearing completion, sparking a substantial decline in Treasury yields. This development marked a stark contrast to the persistent downward trend that had been evident in the market since late February 2026.

The announcement had an immediate and profound impact on the cryptocurrency sector, as Bitcoin managed to recoup its intraday losses and Ether, along with a broad spectrum of digital assets, experienced gains. This upward movement was closely tied to the prevailing risk-on sentiment that was sweeping across traditional financial markets.

A closer examination of the Treasuries market reveals that the 10-year Treasury yield plummeted on May 20, following Trump's comments. Prior to this, the market had been experiencing a prolonged period of turmoil, fueled by escalating tensions between the US and Iran. The prospect of a potential deal between the two nations led to a surge in relief buying, resulting in lower yields and a more stable interest rate environment.

The US-Iran conflict had been simmering since early 2026, with concerns about potential disruptions to the Strait of Hormuz, a critical waterway through which approximately 20% of the world's oil supply passes. Although temporary ceasefires were established in March and April, a lasting resolution had yet to be reached.

The cryptocurrency market was not immune to the effects of Trump's announcement, as Bitcoin rose following his statement on May 23 that a deal was "largely negotiated." Ether and a wide range of other digital currencies followed a similar trajectory, with prediction markets offering valuable insights into the shifting sentiment. On Polymarket, a cryptocurrency-based betting platform, the odds of a US-Iran deal increased to around 37% after Trump's comments.

As of late May, a formal agreement between the US and Iran has yet to be finalized, with prediction markets assigning a roughly one-in-three chance of a deal being reached. This implies that approximately two-thirds of the probability still points to ongoing tensions, no deal, or a scenario that falls somewhere in between, leaving investors to closely monitor the situation and its potential implications.