Bitcoin touched $71,612 on Tuesday evening before falling back to $70,036 in Wednesday’s Asian session as the drop in oil prices added to risk-on sentiment.
A key catalyst was a Wall Street Journal report that the International Energy Agency had proposed the largest crude oil reserve release in its history, surpassing the 182 million barrels released in 2022 following Russia’s invasion of Ukraine.
The proposal responds to output cuts in the Persian Gulf that have removed about 6% of global oil output since the Iran war, sending jet fuel and cooking gas prices skyrocketing worldwide.
Brent oil fell below $90 a barrel on Wednesday. barrel after falling 11% in the previous session. This matters to crypto because oil has been the transmission mechanism connecting the Middle East conflict to every risk asset on the planet. Higher oil means stickier inflation, which means no rate cuts, which means tighter liquidity and further pressure on risk assets.
Bitcoin was trading at $70,036 on Wednesday morning after reaching as high as $71,612 on Tuesday night, up 2.5% on the week. The move from Monday’s low near $66,000 to Tuesday’s high amounts to about 8.5% in two days, although the overnight pullback gave back some of those gains.
“Bitcoin trading above $70,000 tells you that buyers are trying to push this market out of consolidation, but it still needs to prove it can last,” Daniel Reis-Faria, CEO of ZeroStack, said in an email. “The difference this time is that the gearing had cooled down a bit before the move higher, giving it a more stable setup.”
“Now it’s about whether Bitcoin can stay above $70,000 and build from there, or whether it slips back into the same pattern we’ve been in for weeks,” he added.
Elsewhere, FxPro analysts noted that bitcoin is forming a series of higher local lows since late February, the first structural sign that buyers are gaining confidence within the range.
But they marked $73,000 as the level that matters, where last week’s top and the 50-day moving average line up.
The broader market was calm. Ether held at $2,034, down 0.3% on the day but up 2.8% on the week. BNB was flat at $643. XRP rose 0.3% to $1.38 for a weekly gain of 1.7%. Solana added 0.2% to $86.42 but remains down 0.8% over seven days, still the weakest major on a weekly basis.
Dogecoin rose 1% to $0.093, holding on to some of Tuesday’s Musk-fueled gains.
The Fed meeting on 17-18 March is still the next big event. With oil potentially easing on the IEA’s reserve release, the stagflation scenario that had priced markets last week looks a little less dire.
If crude remains below $90, the case for rate cuts later this year becomes marginally stronger. Bitcoin’s 90-day correlation with the S&P 500 is still at 0.78. Whatever the Fed signals, crypto will trade it.
