Bitcoin adding to overnight gains in early US trading on Friday, continuing to show strong relative price action after months of underperformance for assets such as stocks and precious metals.
Trading at $73,800, bitcoin is higher by nearly 5% over the past 24 hours, with most of those gains coming after U.S. Treasury Secretary Scott Bessent said Thursday night that the Trump administration is taking concrete steps to try to curb rising oil prices.
Bitcoin is now up about 11% since the Iran war broke out, outperforming broad U.S. stock indexes and gold, both of which have lost ground since the bombs started falling about two weeks ago.
WTI crude traded at $94.50 a barrel on Friday, down from a high of nearly $98 on Thursday. American shares show increases of around 0.5 per cent.
Oil increases stagflationary risk
The recent rise in oil prices is putting direct pressure on household budgets and, if it continues, could weaken consumer spending and slow economic growth, according to Olu Sonola, head of US economics at Fitch Ratings.
“Yes, the broader economy is still expected to grow on trend, but that forecast looks increasingly fragile as downside risks accumulate… The Fed can retreat from pockets of slowing growth, but resurgent inflation severely limits its room for maneuver, leaving policy potentially stranded for months,” he wrote in a note.
Relief bounce
After a period of some of the worst sentiment in bitcoin’s history, it’s perhaps not surprising that there have been some modest gains of late.
Funding positioning by perpetual futures traders has been negative for the longest period since the end of 2022, noted Vetle Lunde, analyst at K33 Research. This means traders shorting bitcoin are paying long to keep their trades open, resulting in a negative funding rate. The end of 2022 naturally coincided with the aftermath of the FTX crash, when BTC was trading around $16,000 versus $69,000 a year earlier.
The average 30-day funding rate has now been negative for 14 days in a row, the longest since December 2022, Lunde pointed out. These negative streaks coincided with local price troughs over the past seven years, he added.
Meanwhile, bitcoin open interest in perpetual and dated futures has risen 9% over the past 24 hours to around 700,000 BTC, the highest level since February 6. Put it all together and it creates the conditions for a short squeeze.
Friday gain
The day isn’t over yet, but this would be the first Friday gain since the conflict in the Middle East began on February 27. That could indicate a less volatile weekend for crypto, which has made a habit of falling on Saturdays and Sundays in recent weeks.
March is also shaping up to be a turning point for bitcoin. The asset is up about 8% so far this month. Again, it’s early, but a gain in March would break BTC’s five-month losing streak.
