Bitcoin and ether fell early Wednesday as renewed U.S. strikes on Iran pushed oil prices higher and raised the odds of a Federal Reserve rate hike this month. Some strategists call the case for a hike flawed, arguing an oil-driven supply shock is not a reason to tighten policy. Bitcoin's chart also shows a bearish break that traders say could send prices toward $73,000 or lower.
Bitcoin opened at $77,395.89 on Wednesday, 1.5% lower than Tuesday's opening price, then slid to $76,597.13 by 7:13 a.m. ET. Ether fell further, dropping 2.0% from Tuesday's open to $2,373.76. Another round of U.S. airstrikes on Iran and Tehran's retaliation against U.S. military bases rattled risk assets across the board.
Oil shock complicates the Fed's decision
The renewed fighting has pushed WTI crude to $90, up from $70 at the start of July, driven largely by supply disruptions tied to the Iran conflict rather than an overheating economy. Markets now price a 68% chance the Federal Reserve raises interest rates at its Sept. 16 meeting, according to the CME's FedWatch tool.
Some observers argue that reaction is flawed. James E. Thorne, chief market strategist at Wellington-Altus, wrote on X that "Monetary policy should not mechanically react to a jump in headline inflation." A rate hike cannot open shipping lanes or add barrels to the market, the argument goes, but it can tighten credit and add to an economic slowdown.
Technical picture turns bearish
Bitcoin's chart shows the price breaking below a wedge pattern's lower trendline, with the daily candle opening beneath the bottom trendline of the pattern, a sign the breakdown is likely genuine. Analysts point to $76,000 as a shallow support level, while a deeper pullback could reach $73,000, a 10% correction, or the $69,000-$70,000 zone, where the Fibonacci retracement 0.618 level lines up with the 200-day moving average.
The weekly RSI has broken above its downtrend line, a signal that could still favor bulls if it holds through the end of the week. Until the Fed's Sept. 16 decision lands, another leg higher in oil can keep pressure on bitcoin and the rest of the crypto market.
Sources: CoinDesk, Yahoo Finance, Crypto Daily
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