Bitcoin dropped more than 2% after oil prices jumped past $105 a barrel on renewed US-Iran fighting, pushing the price below a support level that had held since late August. The decline comes even as sell-side pressure across the network sits near its lowest point of the year.
Bitcoin slid more than 2% over the past day, trading at $77,208 after sliding as low as $76,748, as oil prices shot past $105 a barrel on renewed fighting between the United States and Iran. The drop followed Iran's signal that it had no intention of backing down against U.S. forces, after the two countries stepped up attacks this week in some of the heaviest fighting since the war began in February. Tehran-backed Houthis in Yemen also hit Saudi Arabian assets this week, adding further pressure to oil prices.
War lifts oil, cuts rate-cut odds
War in the Middle East tends to push oil prices higher and lower the odds of interest rate cuts because of inflation, and bitcoin has typically performed well in a low-rate environment while selling off when the Federal Reserve turns hawkish. The U.S. is in the grip of an affordability crisis, and rising oil prices are a hot topic ahead of the midterm elections; President Donald Trump has reassured voters that prices will come under control. Federal Reserve Chair Kevin Warsh said in his first speech as the central bank's leader that inflation in the U.S. economy had not come down enough. Traders are now pricing in an interest rate hike next week when the bank meets.
Sellers have barely shown up this month
Even so, sellers have been unusually absent all month. Bitcoin lost the $77,617 support level that had held since late August, breaking below it on the heaviest four-hour trading volume of the session. Glassnode's Sell-Side Risk Ratio, which measures realized profit and loss against network size, fell to seven basis points per day — less than half the 16 basis points seen at August's peak. The share of realized profit coming from long-term holders also dropped, from 88% in August to 47%.
A summer boost from Treasury buybacks
Still, bitcoin had one of its best runs in August after the U.S. Treasury said it would at least double the size of its liquidity-support buyback operations in response to surging borrowing costs. The announcement hurt the dollar, but non-yielding assets like bitcoin and gold benefited. Investors have bought the largest cryptocurrency alongside the precious metal to hedge against the dollar's decline, as bitcoin has traded more in tandem with gold this year amid the so-called debasement trade.
Sources: Bitcoin Magazine, Crypto News Flash
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