Bitcoin The next big move may have less to do with cryptocurrency fundamentals and more to do with the direction of oil prices.
The top cryptocurrency by market value has recovered to $70,900 from early week lows near $67,000, following a broader risk-off 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.
Bitcoin has been here before: prices have risen above the $70,000 mark several times in recent weeks, only for rallies to fizzle out quickly, underscoring the lack of sustained bullish momentum.
Will it be different this time? It largely depends on whether oil price weakness continues, according to analysts at cryptocurrency exchange Bitfinex.
“A 15-16 percent collapse in crude oil, if sustained, materially brings forward the potential cut window. Futures markets will likely reprice the additional rate cut probability by the end of 2026, which is a structural tailwind for non-performing risk assets, including bitcoin,” the analysts said in a market update.
A sustained drop in oil prices could ripple through the global economy, partially undoing the inflation shock triggered by the March surge and giving the Federal Reserve and other major central banks more room to cut rates later this year.
If that were to happen, bitcoin could rise to $80,000, with gains driven by the liquidation of short positions.
“Bitcoin sits at $72,000, pushing into a massive pool of short liquidity. Derivatives heat maps show roughly $6 billion in leveraged shorts concentrated between $72,200 and $73,500, with a peak density around $72,500. If spot demand can force the price through that zone, the resulting liquidation cascade would likely catapult Bitcoin through of the supply gap towards $80,000,” Adam Saville Brown, chief commercial officer at Tesseract Group, said in an email.
For now, however, rate cut expectations remain subdued. According to some analysts, the recent rise in energy costs risks keeping inflation elevated without significantly affecting demand, which could lock the Federal Reserve into a prolonged holding pattern in which rates remain at 3.5% with no increases or cuts on the table.
The ceasefire between Iran and the United States appears to have already collapsed, according to media reports. Tensions flared after Israel launched intense attacks on Lebanon, saying the territory was not covered by the deal, a claim that contradicted supposed mediator Pakistan. In a further escalation, an Iranian news agency reported that oil trafficking through the Strait of Hormuz was halted again, just hours after the first tankers were allowed through, citing renewed hostilities.
This means that oil could rise again, causing risk aversion if the warring parties fail to reach an agreement in the coming days.
“The bear case is simpler: If talks collapse, oil goes back above $100 and we’re back to where we were ten days ago. The two-week window creates a binary setup in which derivatives markets will price aggressively,” Brown said.
Bitfinex analysts said oil could rise to $120 if the Strait of Hormuz remains closed, hurting the prospects for Fed rate cuts.
“This creates a binary event known approximately 13 days in advance. Participants who have risk exposure are working within a two-week window. The oil move is already priced in; a ceasefire collapse would be increasingly damaging than the original shock,” the analysts noted.
