The largest cryptocurrency gained 7% from Monday’s lows as energy price fears eased, with Asian equities rising 1.8% and Brent crude dropping below $90 for the first time since the war began. Bitcoin briefly climbed to about $71,600 before easing back near $70,000, as a sharp drop in oil prices revived risk appetite across global markets. The International Energy Agency has proposed its largest-ever release of crude reserves to counter Persian Gulf production cuts, easing fears of persistent inflation and slightly strengthening the case for Federal Reserve rate cuts later this year. With oil potentially easing on the IEA reserve release, the stagflation scenario that had been pricing into markets last week looks slightly less severe.
Analysts say bitcoin is trying to break out of its recent trading range, with $70,000 as a key support and $73,000 as a crucial resistance level, while major altcoins trade mostly steady ahead of the Fed’s March 17-18 meeting. Bitcoin was trading at $70,036 on Wednesday morning after reaching as high as $71,612 on Tuesday evening, up 2.5% on the week. Brent crude dropped below $90 per barrel on Wednesday after plunging 11% in the prior session. That matters for crypto because oil has been the transmission mechanism connecting the Middle East conflict to every risk asset on the planet.
Oil price slides revved up risk sentiment. Bitcoin’s 90-day correlation with the S&P 500 is still at 0.78. If crude stays below $90, the argument for rate cuts later this year gets marginally stronger. The Fed meeting on March 17-18 remains the next major event.
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