Bitcoins The next big move may have less to do with crypto fundamentals and more to do with the direction of oil prices.
The leading cryptocurrency by market capitalization has risen to $70,900 from early-week lows near $67,000, tracking a broader risk-on move after the United States and Iran agreed to a two-week ceasefire late Tuesday that sent oil prices down about 15% to below $100 a barrel. barrel.
Bitcoin has been here before – prices have surged above the $70,000 mark several times in recent weeks, only for the rallies to fizzle out quickly, underscoring the lack of sustained upward momentum.
Will it be different this time? It largely depends on whether the weakness in oil prices continues, according to analysts at crypto exchange Bitfinex.
“A 15-16 percent collapse in crude oil, if sustained, significantly brings forward the potential cut window. Futures markets are likely to reprice further rate cut probability for late 2026, which is a structural tailwind for non-yielding risk assets, including bitcoin,” analysts said in a market update.
A sustained drop in oil prices could ripple through the global economy, partially unwinding the inflation shock triggered by the March hike and giving the Federal Reserve and other major central banks more room to cut interest rates later this year.
Should that happen, bitcoin could rise to $80,000, with gains driven by the liquidation of short positions.
“Bitcoin is sitting at $72,000 and is squeezing into a massive cluster of short liquidity. Derivatives heatmap shows about $6 billion in leveraged shorts concentrated between $72,200 and $73,500, with peak density around $72,500. If spot demand can force the price through the liquid zone, Bitcoins will likely push the price through the liquid zone. $80,000,” said Adam Saville Brown, head of commercial at Tesseract Group, in an email.
But right now, expectations for interest rate cuts are still subdued. According to some analysts, the recent rise in energy costs risks keeping inflation high without significantly reducing demand, potentially locking the Fed into a longer holding pattern where interest rates remain at 3.5% with neither hikes nor cuts on the table.
The ceasefire between Iran and the US appears to have already been settled, according to media reports. Tensions flared after Israel launched intense attacks in Lebanon, saying the area was not covered by the accord – a claim contradicted by the supposed broker, Pakistan. In a further escalation, an Iranian news agency reported that oil traffic through the Strait of Hormuz was halted again just hours after the first tankers were allowed to pass, citing the renewed hostilities.
This means that oil could rise again, which will trigger risk aversion if the warring parties cannot reach an agreement in the coming days.
“The bear case is simpler: If talks collapse, oil rips back above $100 and we’re back to where we were ten days ago. The two-week window creates a binary setup where derivatives markets will price aggressively,” Brown said.
Bitfinex analysts said oil could rise to $120 if the Strait of Hormuz remains closed, dampening prospects for Fed rate cuts.
“This creates a familiar binary event about 13 days out. Participants who have risk exposure are working within a two-week window. The oil movement has been priced in; a truce collapse would be progressively more damaging than the initial shock,” analysts noted.
