Operation Fauxios
Dick Lo3 min read·Just now--
07-May-2026
- Overnight, Axios reported that the U.S. and Iran are nearing a one-page Memorandum of Understanding to conclude the ongoing conflict. The rumoured 14-point framework reportedly includes a 12-to-15-year moratorium on Iranian uranium enrichment in exchange for the lifting of U.S. sanctions and the release of frozen sovereign funds. Market participants remain understandably sceptical, given the historical lack of follow-through on previous reports from the outlet. Tehran has been equally dismissive, with officials characterising Axios as a “Washington mouthpiece” and the Parliament Speaker disparaging the latest headlines as “Operation Fauxios”
- A degree of cautious optimism is warranted, however, as Beijing begins to exert its significant diplomatic leverage. As we reported yesterday, Foreign Minister Wang Yi utilised his meeting with Abbas Araghchi to intensify pressure on Tehran to pursue a negotiated off-ramp. As the primary consumer of Gulf energy, China has a diminishing appetite for the continued blockade of the Strait of Hormuz, which increasingly threatens its own economic stability. This high-level dialogue in Beijing has been strategically timed to serve as a pre-summit framework, potentially allowing Presidents Trump and Xi to announce a formal cessation of the extended conflict during their high-profile meeting next week. This narrative also aligns with President Trump’s phone interview with Fox News, in which he stated that an agreement could be finalised within “one week”
- Patrick Witt, the White House Digital Asset Advisor, has reaffirmed that a milestone update regarding the U.S. Strategic Bitcoin Reserve is expected within the “next few weeks”. Following his initial preview at the Bitcoin 2026 conference in Las Vegas, Witt reiterated this timeline yesterday at Consensus Miami. Pointing to a recent security vulnerability involving digital assets held by the U.S. Marshals Service, Witt’s remarks suggest that the forthcoming announcement will likely prioritise the statutory codification of existing government-held Bitcoin. While this initiative would neutralise the supply overhang concerns associated with the 328k BTC held by the federal government, immediate market impact is likely to be muted, unless a clear mandate on new open-market acquisitions of BTC is also announced. Crucially, the market is almost fully discounting the possibility of an expanded mandate, hence, should the administration unveil a budget-neutral pathway for proactive Bitocin acquisitions, it would represent a significant right-tail surprise and force a rapid repricing of BTC
- Speaking at the Milken Institute, Chicago Fed President Austan Goolsbee cautioned against excessive exuberance regarding an AI-driven productivity boom. Addressing monetary policy, Goolsbee stated he sees no immediate justification for rate cuts and instead warned that rate hikes may be warranted if anticipatory AI investment and wealth effect spending overheat the economy before realised productivity gains materialise. A significantly weaker-than-expected non-farm payrolls reading on Friday may be required to soften the committee’s current hawkish posture and pull Fed members back from the rate hike precipice
Trading Roadmap
- Following a period of exceptional performance, Bitcoin is currently consolidating above the $80k handle. The asset is up over 6% in the first week of May, building on a robust 11.8% gain in April. We maintain our core May and June structures with the intention of incrementally monetising into strength as we approach the $83.5k resistance level, while more aggressively taking profits toward our secondary $89.8k target. On dips below $80k, we look to roll structures up (higher strikes) and out (longer tenor), specifically favouring Call Ladders funded by short OTM puts
- We are also closely monitoring the May 8 expiration of the 30-day non-action window, which introduces a potential weekend tail risk of resumed military strikes. While we view a pre-summit escalation as the less likely scenario ahead of the Trump-Xi meeting, we are actively managing this risk via long gamma positions on high-beta altcoins to hedge our core long BTC exposure
