Major progress in Russia-Ukraine ceasefire negotiations, will the crypto market迎“risk appetite” recovery?

Recently, diplomatic negotiations aimed at ending the Russia-Ukraine conflict have achieved the most substantial progress since the outbreak of war. US and European officials have reached broad consensus on a possible ceasefire and post-war security framework. This significant easing of geopolitical risk signals is prompting global investors to reassess asset allocation. For the cryptocurrency markets that have recently experienced sharp declines due to global risk aversion, a credible ceasefire agreement is expected to inject critical positive sentiment by improving risk appetite, stabilizing energy prices, and inflation expectations. However, the long-term trend of cryptocurrencies will still be fundamentally constrained by macroeconomic liquidity and major central bank policies.

Ceasefire Negotiation Breakthrough: From Battlefield to Negotiation Table’s Substantive Shift

The prolonged Russia-Ukraine conflict seems to be approaching a crucial turning point. During intensive negotiations held in Berlin this week, Ukraine, the US, and key European allies made significant progress in ending hostilities and establishing a post-war security framework. According to officials involved in the talks, all parties have reached consensus on about 90% of the framework content, marking the most substantive diplomatic breakthrough since the conflict began.

The core progress in negotiations involves the US agreeing to provide meaningful security guarantees to Ukraine in response to Kyiv’s long-standing demands for protection against future invasions. Additionally, European leaders support forming a multilateral force led by Europe to help stabilize Ukraine’s situation after the ceasefire, supplemented by a US-supported monitoring and verification mechanism. However, final obstacles remain, mainly revolving around the territorial issue in Ukraine’s Donetsk region. Meanwhile, domestic public opinion in Ukraine also acts as a significant constraint, with most citizens opposing major territorial concessions or military restrictions without firm and enforceable security commitments.

Interestingly, diplomatic progress has not immediately calmed the battlefield. During negotiations, Ukrainian forces launched a new round of long-range drone strikes on key Russian oil infrastructure in the Caspian Sea, continuing their strategy of weakening energy revenue to increase bargaining chips. This “strike while negotiating” scenario also signals to the market that the final agreement’s achievement and implementation still carry uncertainties, and any setbacks could quickly disturb market sentiment.

Market Impact Logic: Easing Geopolitical Risk Premiums and Capital Rotation

For a credible Russia-Ukraine ceasefire, the most direct response from financial markets will be a significant reduction in global “tail risks”. In risk sentiment-driven markets, such geopolitical risk cooling typically triggers a cascade: capital will flow out of traditional safe havens (such as US Treasuries and the US dollar) and redeploy into risk assets; implied volatility across equities and digital assets is expected to decrease.

Specifically, the path for benefits to cryptocurrencies is relatively clear. First, Bitcoin and Ethereum, as foundational digital assets, are most likely to be the first to attract capital rotation out of safe-haven assets. Second, the overall increase in risk appetite often catalyzes further capital inflows into high-beta alternative assets, including mainstream altcoins. This “risk preference recovery” pattern has played out multiple times historically, driven by the core mechanism: when clouds of uncertainty dissipate, investors’ willingness to seek growth and returns surpasses their demand for safety.

Deeper, this influence could transmit through commodity markets, especially energy prices. Conflicts are a key factor pushing up global energy prices and inflation expectations. A sustainable ceasefire, if it alleviates supply concerns and stabilizes or lowers oil prices, could ease inflation pressures globally (particularly in Europe). This, in turn, would provide central banks with more room to maintain or further adopt loose monetary policies. Historically, easing financial conditions have been a key pillar supporting valuation of all risk assets, including cryptocurrencies. However, this transmission chain is not instantaneous; its effectiveness depends on the market’s speed in perceiving structural changes in energy markets and adjustments in central bank policy paths.

Potential Impact Pathways of Ceasefire Agreements on Crypto Markets

Positive Transmission Paths:

1. Sentiment: Geopolitical risk premium decline → global risk-on sentiment revival → capital outflows from bonds and safe assets.
2. Capital Flows: Risk appetite-driven rotation → inflows into Bitcoin, Ethereum, and other core cryptocurrencies → reduced market volatility, creating positive feedback loops.
3. Macro: Conflict mitigation stabilizes energy prices → lowers global inflation expectations → central banks gain more room for easing → improved financial system liquidity, benefiting all risk assets.

Main Constraints and Risks:

1. Independent macro pressures: Uncertainty in central bank policies (especially Fed and Bank of Japan), persistent inflation data could continue restricting liquidity, offsetting the positive effects of ceasefire.
2. Derivative market structure: High leverage in crypto markets may make “relief rallies” short-lived and volatile; high funding rates could trigger new liquidations or sell-offs.
3. Liquidity fundamentals: Asset prices’ sustained rise ultimately depends on abundant liquidity. If global financial conditions do not materially ease due to ceasefire, crypto rally may be fleeting.

New Paradigm for Crypto Markets: Opportunities and Challenges Under Macro Narrative Dominance

This geopolitical event profoundly confirms a fundamental shift in the current cryptocurrency market: the investment paradigm has shifted from being primarily driven by technological innovation to macro narrative-driven. Previously, excess returns often stemmed from early adoption of DeFi, NFTs, Layer2 solutions, and other technological advances. Now, as reflected in retrospective analyses of 2025 markets, the largest alpha sources are from anticipations of US policy directions, global macroeconomics, and geopolitical developments.

The potential ceasefire in Russia-Ukraine exemplifies such a macro narrative. It no longer pertains solely to technological progress or adoption rates within crypto but acts as a systemic variable, influencing risk sentiment, inflation trajectories, and central bank decisions, thereby systematically impacting all asset classes. Crypto can no longer be insulated from this. This high correlation implies that future crypto market participants must resemble traditional macro traders, closely monitoring changes in global political and economic landscapes.

This shift also complements the institutionalization of the crypto market structure. As Bitcoin spot ETFs are approved, the GENIUS Stablecoin Act is implemented, and US regulatory policy transitions from “enforcement and regulation” to “classification and encouragement of innovation,” traditional financial institutions are entering the space at unprecedented scale. Their sensitivity to macro risk factors exceeds that of retail investors, further strengthening the linkage between cryptocurrencies and mainstream financial markets. Consequently, the resolution of geopolitical tensions is viewed by institutional investors as a reason to reduce overall portfolio risk and potentially increase crypto allocations.

Conclusion: Short-term Sentiment Catalysts, Difficult to Alter Long-term Macro Tone

In summary, reaching a ceasefire agreement between Russia and Ukraine will mark a major geopolitical and market turning point toward the end of 2025. For the crypto market, this is undoubtedly a short-term positive signal, likely to trigger a wave of “relief rallies.” Improved market sentiment and reallocation of risk capital will give upward momentum to Bitcoin and major altcoins.

However, investors should recognize that geopolitical optimism may only be a “necessary but insufficient” condition. The policy-driven bull market experienced by cryptocurrencies in 2025 and the subsequent sharp decline triggered by macro tightening and tariff conflicts (“1011” crash) show that industry-specific positives are often insufficient to offset systemic macro risks. Ultimately, the long-term market trajectory will depend on fundamental factors such as global central bank liquidity policies, recession risks in major economies, and leverage structures within crypto markets.

Looking ahead, in a new cycle dominated by macro narratives and institutional capital, crypto prices will become more deeply embedded in the pulse of the global financial system. The easing of geopolitical tensions is akin to removing a roadblock, but the ultimate direction and smoothness of that road still depend on the broader and more complex terrain of global macroeconomics. For investors, while seizing tactical opportunities from such events, maintaining strategic focus on macro fundamentals remains key to navigating this new paradigm.