bitcoin It touched $71,612 on Tuesday afternoon before settling back down to $70,036 in the Asian session on Wednesday, as falling oil prices accelerated risk sentiment.
A key catalyst was a Wall Street Journal report that the International Energy Agency had proposed the largest release of crude reserves in its history, surpassing the 182 million barrels released in 2022 after the Russian invasion of Ukraine.
The proposal responds to Persian Gulf production cuts that have wiped out about 6% of global oil production since the war with Iran began, sending jet fuel and cooking gas prices soaring around the world.
Brent crude oil fell below $90 a barrel on Wednesday after falling 11% in the previous session. That’s important for cryptocurrencies because oil has been the transmission mechanism that connects the Middle East conflict to every risk asset on the planet. Higher oil means stiffer inflation, which means no rate cuts, which means tighter liquidity and more pressure on risk assets.
Bitcoin was trading at $70,036 on Wednesday morning after hitting $71,612 on Tuesday night, up 2.5% on the week. The move from Monday’s low near $66,000 to Tuesday’s high is equivalent to about 8.5% in two days, although the overnight pullback gave back some of those gains.
“Bitcoin trading above $70,000 indicates that buyers are trying to get this market out of consolidation, but it has yet to prove it can hold,” Daniel Reis-Faria, CEO of ZeroStack, said in an email. “The difference this time is that the leverage had cooled a bit before the bullish move, giving it a more stable setup.”
“Now it all comes down to whether Bitcoin can stay above $70,000 and grow from there, or if it falls back into the same pattern we’ve been in for weeks,” he added.
Separately, FxPro analysts noted that bitcoin is forming a series of higher local lows since late February, the first structural sign that buyers are gaining confidence within the range.
But they pointed to $73,000 as the level that matters, where last week’s peak and the 50-day moving average meet together.
The market in general was calm. Ether held at $2,034, down 0.3% on the day but up 2.8% on the week. BNB remained stable at $643. XRP rose 0.3% to $1.38 with a weekly gain of 1.7%. Solana added 0.2% to $86.42, but is still down 0.8% over seven days, and remains the weakest major on a weekly basis.
Dogecoin rose 1% to $0.093, maintaining some of Tuesday’s Musk-driven gains.
The Federal Reserve meeting on March 17-18 remains the next big event. Given that oil could decline following the release of IEA reserves, the stagflation scenario that the markets had been pricing in last week appears slightly less severe.
If crude oil stays below $90, the case for rate cuts later this year becomes marginally stronger. Bitcoin’s 90-day correlation with the S&P 500 remains at 0.78. Regardless of what the Federal Reserve says, cryptocurrencies will negotiate it.
