Bitcoin has outperformed U.S. equities and gold since the late February attack on Iran. However, a potential spike in oil prices toward $180 per barrel presents a serious challenge. A sustained oil shock could raise U.S. inflation to around 5%, reducing expectations for Federal Reserve rate cuts and creating macro headwinds for risk assets like Bitcoin, with technical analysis suggesting a potential price decline toward $51,000.
Bitcoin has demonstrated resilience, outperforming traditional assets like U.S. stocks and gold following recent Middle East tensions. This strength may be tested if oil prices surge to $180 per barrel, a scenario some Saudi officials consider plausible. Brent crude is already near $105, a 50% increase since the conflict began.
Oil transit through the Strait of Hormuz has dropped sharply, according to data referenced by Kpler. Vortexa estimates an even steeper decline, highlighting the scale of the supply shock.
A Federal Reserve study stated that every 10% rise in crude can add 0.35–0.40 percentage points to U.S. inflation. An extended rally could therefore push headline inflation to 5%, well above the Fed’s target.
Markets have adjusted, with data from CME showing the odds of a first rate cut now pushed to October 2027. Higher borrowing costs tend to weaken investor appetite for risk assets like Bitcoin.
Bitcoin’s price has corrected nearly 10% from its recent high, trading below $70,000. This pullback has formed a technical pattern with a measured downside target near $51,000.
Demand dynamics have also shifted, as MicroStrategy did not purchase Bitcoin this week. The firm had been absorbing supply equal to weeks of mining output, and its absence removes a key demand source. Concurrently, Coinbase premium has turned negative, signaling softer U.S. demand.
