Bitcoin recovered about 1% as oil prices and the dollar fell, but OPEC+ keeping December output targets unchanged leaves inflation and Fed policy as open risks. October US inflation data due Nov. 10 is the next test.
Bitcoin climbed around 1% to approximately $78,724 early Monday, as falling oil prices and a weaker dollar offered some relief to risk assets.
Brent crude declined about 3% to $110 a barrel after trading above $114 on Friday, while the dollar index slipped 0.5% to 101.45.
OPEC+ holds output targets steady
Seven producers, including Saudi Arabia and Russia, maintained September production targets through December in the Nov. 1 decision. They declined to announce additional increases despite months of disruptions to Middle Eastern exports.
The decision could leave Bitcoin exposed to renewed inflation pressure if oil shipments remain constrained, potentially reinforcing the Federal Reserve's reluctance to loosen monetary conditions. That risk has become more pronounced after the central bank raised interest rates in September and held them at 3.75% to 4% on Oct. 28, with two policymakers voting for another increase.
Gasoline drove September's price surge
The Bureau of Labor Statistics reported that gasoline prices surged 9.1% in September, accounting for more than half of the month's 0.6% increase in consumer prices. Annual inflation reached 3.7%, while core inflation stood at 2.6%.
Another energy-driven inflation surprise could strengthen expectations that borrowing costs will remain elevated. That could restrict the liquidity and risk-taking appetite that support cryptocurrency valuations.
Iran diplomacy drives the oil retreat
Ole Hansen, head of commodity strategy at Saxo Bank, attributed Monday's crude decline to reports that President Donald Trump favored giving diplomacy with Iran more time before potentially resuming military strikes after Tuesday's US midterm elections. Meanwhile, attacks on vessels near the Strait of Hormuz threaten further supply disruptions.
Goldman Sachs raised its December Brent forecast to $105 from $90, citing heightened geopolitical risks.
Bitcoin's next macroeconomic test arrives Nov. 10, when October US inflation data and the EIA's updated oil outlook are due. Softer fuel inflation could weaken expectations of further Fed tightening, while renewed price pressure would complicate the cryptocurrency's attempt to sustain its recovery.
Source: CryptoSlate
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