Bitcoin The broader cryptocurrency market fell sharply on Thursday as escalating tensions between the United States and Iran pushed oil above $100 a barrel. Renewed geopolitical uncertainty erased part of the crypto rebound this week and brought inflation and interest rate fears back to the center of the market.
Bitcoin has fallen below $65,000 after recently approaching $67,000. Ethereum price fell below $1,900, while XRP, Solana, Dogecoin, and Cardano posted larger daily losses.
The immediate question is whether this is a temporary reaction to breaking news or the beginning of another significant correction for cryptocurrencies.
Why did the price of oil rise above $100?
Brent crude jumped about 7% to more than $100 a barrel, reaching its highest levels in about two months. WTI also moved above the $90 level.
This increase came in the wake of attacks by Houthi forces allied with Iran on two Saudi oil tankers in the Red Sea. The group also threatened to disrupt Saudi oil shipments through the Bab al-Mandab Strait, one of the most important maritime trade routes in the world.
These attacks are particularly concerning because shipping through the Strait of Hormuz has already been severely disrupted. If the Strait of Hormuz and the Red Sea become an increasing threat to tankers, a large share of global energy supplies could face delays or complete outages.
US President Donald Trump then promised major military sanctions against Iran and its regional allies, raising fears that the conflict could expand further.
Goldman Sachs analysts warned that Brent crude may rise Above $120 If supplies continue to be interrupted.
Why does Bitcoin fall when oil rises?
Bitcoin is not directly dependent on oil, but a major energy shock could affect almost every risky asset.
High oil prices lead to increased transportation, manufacturing, and electricity costs. Companies often pass these costs on to consumers, creating another source of inflation.
If inflation starts to accelerate again, the Fed may not be able to cut interest rates. It could even consider additional price increases if price pressures become severe enough.
This possibility is already factored into market expectations. After oil prices rose, traders began assigning a roughly 40% probability of a rate hike by the Federal Reserve at its next meeting. Just a few days ago, the probability was in the single digits.
High rates generally hurt Bitcoin, technology stocks, and other speculative investments. Investors can earn more from government bonds while taking on substantially less risk, reducing the appeal of non-yielding assets.
The cryptocurrency market turns red
Bitcoin was trading at around $64,700 after falling nearly 2% over 24 hours. The decline came after being rejected near the important resistance level of $67,000.
Ethereum It fell nearly 3% to around $1,888, missing the psychologically important level of $1,900. The damage was most pronounced among several major altcoins:
- XRP fell by approximately 3.8%.
- Solana shares fell about 3%.
- Dogecoin lost nearly 5%.
- Cardano fell by more than 5.5%.
- Stellar price fell approximately 4.5%.
Hyperliquid, Zcash, and Monero were among the few major cryptocurrencies that remained positive during the same period.
The performance indicates that investors are reducing their exposure to higher-risk altcoins first. This is normal during periods of geopolitical uncertainty, when liquidity moves towards cash, government bonds and other defensive assets.
Bitcoin’s safe haven narrative faces another test
Bitcoin is often presented as digital gold and a hedge against political instability. However, its reaction to the recent escalation with Iran tells a more complex story.
Instead of rising along with geopolitical risks, Bitcoin fell with stocks. This suggests that traders still treat Bitcoin primarily as a risky asset, especially when an international crisis threatens inflation and monetary policy.
Bitcoin may benefit from currency depreciation and long-term concerns about government debt. But in the short term, sudden market shocks often prompt investors to sell liquid assets to reduce risk or cover losses elsewhere.
This does not necessarily invalidate the safe haven argument for Bitcoin in the long term. It shows that Bitcoin can behave very differently than gold during the initial phase of a crisis.
Can Bitcoin recover?
The $64,000 to $65,000 area is now the first important area to watch. If Bitcoin stabilizes above this area, the decline could still be a natural correction after its 13% rebound from July lows.
A recovery would need to push BTC above $67,000. A break of this resistance could open the way towards $70,000 and then the 200-day EMA near $72,800.
The bearish scenario will start with a critical loss of $64,000. This could reveal recent support areas around $62,000 and $60,000. Altcoins are likely to suffer relatively larger losses if Bitcoin moves towards those levels.
The next step will depend largely on developments in the Middle East. Any sign of de-escalation or recovery of shipping routes could bring down oil prices and help cryptocurrencies recover. Additional attacks on tankers, energy facilities, or strategic waterways could send oil prices higher and prolong the risk-off movement.
Will another cryptocurrency collapse come?
The current decline is not yet significant enough to confirm a new collapse in cryptocurrencies. Bitcoin is still above its recent lows, and the market has not seen the type of large-scale liquidation chain typically associated with a major crash.
However, the combination of a $100 oil price, rising bond yields, renewed interest rate hike expectations, and escalating military action, creates a dangerous environment for speculative assets.
Cryptocurrency investors should therefore keep an eye on oil alongside Bitcoin. As long as Brent crude remains above $100 and the struggle continues to expand, Bitcoin may struggle to reclaim $67,000 – even if ETF demand and regulatory developments remain supportive.
For now, geopolitical risks have taken over the market, and Bitcoin’s next major move outside of the cryptocurrency industry may be determined.
