Bitcoin and the main crypto market fell sharply on Thursday as the growing tensions between the United States and Iran pushed oil above $100 per barrel. Global uncertainty has erased part of crypto’s recovery this week and pushed inflation and interest rates back into the middle of the market.
Bitcoin fell below $65,000 after approaching $67,000 recently. Ethereum fell below $1,900, while XRP, Solana, Dogecoin and Cardano recorded major daily losses.
The immediate question is whether this is a temporary phenomenon of the issues that have occurred or the beginning of another major crypto correction.
Why Did Oil Rise Above $100?
Brent crude jumped nearly 7% to over $100 a barrel, hitting its highest level in nearly two months. West Texas Intermediate also moved above $90.
The explosion followed an attack by Iran-allied Houthi forces on two Saudi oil tankers in the Red Sea. The group also threatened to disrupt oil shipments to Saudi Arabia through the Bab el-Mandeb Strait, one of the world’s most important maritime trade routes.
The attacks are particularly difficult because shipping through the Strait of Hormuz has already been disrupted. If both the Strait of Hormuz and the Red Sea become dangerous for ships, a large part of the world’s energy supply could be delayed or disrupted.
US President Donald Trump later pledged greater military sanctions against Iran and its allies in the region, raising concerns that the conflict could escalate.
Analysts at Goldman Sachs have warned that Brent’s bullishness could escalate more than $120 if the supply chain continues.
Why Is Bitcoin Falling While Oil Is Rising?
Bitcoin is not dependent on oil, but a major energy shock can affect almost anything catastrophic.
Higher oil prices increase transportation, manufacturing and electricity. Businesses often pass the money on to consumers, creating another source of inflation.
If inflation picks up again, the Federal Reserve may be unable to cut interest rates. It can also consider further increases if the prices become high enough.
That possibility is already entering market expectations. Following the increase in oil, traders are said to have started to give about 40% chance of a rate hike by the Federal Reserve at the next meeting. A few days earlier, the odds were in the single digits.
High prices often hurt Bitcoin, technology stocks and other speculative businesses. Investors can get more from government bonds while taking on less risk, reducing the appeal of non-yielding assets.
The Crypto Market Has Turned Red
Bitcoin traded around $64,700 after falling nearly 2% in 24 hours. The decline followed its rejection near the key $67,000 level.
Ethereum it fell nearly 3% to around $1,888, missing the key $1,900 level of sentiment. The crash was particularly noticeable among several major altcoins:
- XRP was down about 3.8%.
- Solana fell about 3%.
- Dogecoin lost about 5%.
- Cardano fell more than 5.5%.
- Stellar was down about 4.5%.
Hyperliquid, Zcash and Monero were among the few cryptocurrencies that remained at the same time.
The project suggests that investors reduce their exposure to risky altcoins in the first place. This is the case during times of national uncertainty, when money flows into stocks, government bonds and other defensive assets.
The Bitcoin Safe-Haven Narrative Meets Another Test
Bitcoin is often portrayed as digital gold and a hedge against political instability. However, their reaction to Iran’s recent escalation tells us a more complicated story.
Instead of rising with geopolitical risk, Bitcoin fell with stocks. This shows that traders are still using BTC mainly as a risk asset, especially when the international crisis threatens inflation and monetary policy.
Bitcoin can benefit from the financial crisis and long-term concerns about the government debt. However, in the short term, sudden market shocks often prompt investors to sell liquid assets to reduce risk or recoup losses elsewhere.
This doesn’t stop Bitcoin’s long-term controversy. It shows that Bitcoin can behave very differently from gold during the first crisis.
Can Bitcoin Recover?
The $64,000 to $65,000 area is now the first area to watch. If Bitcoin stabilizes above this area, the decline could be a positive retracement following its 13% recovery from the July low.
A reversal may be needed to push BTC back above $67,000. A breach of this resistance could open the way to $70,000 and then a 200-day move near $72,800.
The event may begin with a maximum loss of $64,000. This would reveal recent support areas around $62,000 and $60,000. Altcoins can experience significant losses if Bitcoin moves to those levels.
The next move will largely depend on what is happening in the Middle East. Any signs of a slowdown or recovery in shipping channels can lower the oil and help crypto recover. Additional attacks on oil tankers, power plants or waterways could increase oil spills and increase risk mobility.
Is Another Crypto Crash Coming?
The current decline is not enough to warrant a new crypto crash. Bitcoin is still above its recent lows, and the market has not yet experienced the type of drop that is usually associated with major crashes.
However, the combination of $100 oil, rising bond yields, expected inflation and military escalation creates a dangerous environment for speculative stocks.
Crypto investors should watch oil along with Bitcoin. As long as Brent remains above $100 and the conflict continues, BTC may struggle to regain $67,000—even if ETF demand and management remain stable. management of management of management of management of management of management of management
Currently, geopolitical risk has taken control of the market, and the next big move for Bitcoin can be considered outside of the crypto industry.
