Trade Idea: Israel x Hamas ceasefire before May?
Market: Israel x Hamas ceasefire before May?
Trade: No
Current Odds: 72%
Return: 39%
Resolved by: End of April (1 month)
Position Size: Full
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The Breakdown of the Israel-Hamas Ceasefire
The fragile January ceasefire between Israel and Hamas didn't survive winter, shattering in mid-March when Israeli airstrikes pummeled Gaza, leaving hundreds dead and peace negotiations in tatters. As April begins, hopes for a new agreement have all but vanished. Military operations continue unabated, political will is nonexistent, the humanitarian situation grows more desperate by the day, and the gulf between each side's demands seems unbridgeable. With both parties digging in their heels, the diplomatic path forward looks increasingly like a dead end.
The ceasefire agreement brokered during the final days of the Biden administration - although it is debated whether Trump or Biden can take more of the credit – represented a significant diplomatic achievement after months of devastating conflict. Implemented on January 19, 2025, the agreement established a phased approach toward sustainable peace in the region. Phase one, completed March 1, saw Hamas release 25 living hostages and eight deceased captives in exchange for roughly 1,800 Palestinian prisoners held by Israel. This successful first step proved both sides could deliver on promises under international supervision.
Phase two was set to begin just over two weeks later, aiming for the return of all remaining hostages and establishment of a permanent ceasefire. The third phase would have facilitated the return of all remaining deceased hostages and laid groundwork for Gaza's reconstruction.
But the transition never happened. As phase one concluded, talks immediately hit a wall. Hamas insisted on moving forward as planned, with spokesperson Hazem Qassem emphasizing their "full commitment to implementing all the terms of the agreement in all its stages and details." Meanwhile, Netanyahu's government pushed to extend phase one rather than advance to phase two—effectively trying to rewrite the agreement's core structure. This fundamental disconnect marked the beginning of the end, with mutual accusations of bad faith quickly undermining the fragile progress that had been made.
Obstacles to an April 2025 Ceasefire
Several key roadblocks make a new ceasefire in April virtually impossible, with both sides growing more rigid in their positions. The most glaring problem is that each side wants what the other absolutely refuses to give. Hamas won't budge from its demands for a permanent ceasefire, complete Israeli withdrawal, return of displaced Palestinians to northern Gaza, and what they call an "honorable prisoner exchange."
On the other side, Israel flatly rejects any deal that leaves Hamas standing. Netanyahu's government has promised to continue military operations "with increasing military strength," while the IDF has declared operations "will continue as long as necessary, and will expand beyond air strikes." This fundamental clash—Hamas demanding survival while Israel demands its elimination—creates a negotiating deadlock.
The hostage situation further complicates matters. By Israeli counts, Hamas still holds 59 captives, though only 24 are believed alive. This reduced number of living hostages weakens Hamas's bargaining position, possibly explaining their reluctance to release more captives without permanent ceasefire guarantees. Israel's military campaign seems partly designed to force Hamas into worse terms on hostage releases. But this approach may actually be decreasing the chances of recovery, as Hamas leaders like believing "their days are numbered"—have "limited or possibly nonexistent" reasons to compromise.
The political situation on both sides makes an April ceasefire nearly impossible, with leaders facing intense pressure against compromise. Netanyahu is boxed in by his far-right coalition partners who flatly oppose any deal allowing Hamas to survive. Key figures have threatened to bring down the government if Netanyahu returns to phase two of the original agreement instead of continuing military operations. These hardliners want not just Hamas's destruction but also "voluntary emigration" of Palestinians and new Jewish settlements in Gaza.
The Witkoff plan could have given Netanyahu "six weeks of breathing room and enough time to pass a budget by the end of the month," preventing his government's collapse. However by resuming hostilities, Netanyahu appears to have chosen military action over diplomacy, largely due to these domestic political pressures.
Hamas leaders face their own calculations that make compromise unattractive. With Israeli forces actively hunting senior Hamas figures, the group's leadership sees little benefit in negotiating when they believe Israel aims to eliminate them regardless of any agreement. As FDD Senior Advisor Richard Goldberg observed, "Hamas wants to survive... The more Hamas leaders believe they will survive without giving up their leverage — hostages — the more they will hold out." Moreover, the failure of the original ceasefire to progress to phase two as promised has likely convinced Hamas that Israel won't honor future agreements, further undermining any motivation to negotiate new terms.
Previous mediation efforts by Egypt, Qatar, and the United States have thus far proven unsuccessful. Negotiations in Cairo in early March 2025 "bore no fruit" despite "intensive discussions". The collapse of previous mediation efforts has eroded trust in the process itself, making future negotiations more difficult.
Conclusion
Military escalation, clashing demands, political pressures, and failed mediation efforts have created a perfect storm that makes any April ceasefire virtually impossible. Israel's decision to break the existing agreement and resume military operations reveals a clear preference for battlefield solutions over diplomatic ones. At the same time, Hamas refuses to budge from its maximalist position or accept modified terms.
The humanitarian crisis in Gaza continues to worsen under Israel's aid blockade and renewed bombing campaign. Yet even this catastrophe hasn't pushed either side toward compromise. With the US backing Israel's position and mediators' credibility damaged by past failures, the diplomatic framework needed to restart talks simply isn't there. Barring some dramatic and unexpected shift, a ceasefire in April remains extremely unlikely. Both sides seem prepared to continue fighting rather than find middle ground.
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