Bitcoin (BTC) returned to $79,000 after Monday’s Wall Street open as markets dissected mixed signals over the US-Iran war.
Key points:
- Bitcoin rises above $79,000 as oil prices fall after US President Donald Trump suggests the Iran war could be nearing an end.
- Markets raise the odds of a 25-basis-point Federal Reserve rate hike to more than 90%.
- Bitcoin tests its 50-week exponential moving average after closing below the key trend line on Sunday.
Bitcoin gains as Trump references end to Iran war
Data from TradingView showed BTC/USD erasing its weekend losses and gaining around 3% on the day.
Crypto saw fresh upside as US President Donald Trump boosted prospects of a peace deal with Iran.
“The failing Nation of Iran wants to make a deal, quickly and badly. I will determine whether or not the U.S.A. will choose to engage – The concept of which we are open to,” he wrote in a post on Truth Social.
US equities initially gained at Monday’s Wall Street open but subsequently turned red amid ongoing uncertainty over the fate of key oil-transit routes in the Middle East. The S&P 500 was down 0.3% at the time of writing.
In addition to the Strait of Hormuz, both Saudi Arabia’s East-West pipeline and the Bab El-Mandeb Strait were under threat as the conflict expanded beyond Iran.
US WTI crude oil remained above $100 per barrel at the time of writing, while Brent crude traded at $105 per barrel.
Trump later doubled down on his prediction of lower oil prices while also alluding to an end to the Iran conflict, causing oil prices to dip.
“With the temporary exception of Oil, prices are coming down sharply, and Oil will drop like a rock as soon as the Military Conflict with Iran is over, and that will not be long,” a separate Truth Social post read.
The latest data from CME Group’s FedWatch Tool puts the odds of a hike at 92.7%, up from 59.4% a week ago.
Commenting on the developments, trading company QCP Capital predicted that continued high oil prices would directly impact US financial policy. The Federal Reserve will announce its latest decision on interest-rate changes on Wednesday, with markets predicting a 25-basis-point hike to 3.75-4%.
“A prolonged disruption would increase the risk of higher energy costs feeding into transport and logistics pricing, potentially lifting inflation expectations and constraining the Fed’s ability to pause tightening even as growth slows,” QCP wrote on Monday, adding:
“This dynamic creates policy tension: continued energy prices could keep the Fed restrictive, while economic data weakness from higher energy costs could argue for patience.”
Focus shifts to Fed wording around interest-rate move
Discussing the implications of the week’s Fed decision for BTC price action, QCP argued that risk assets had already priced in a 0.25% hike, with less volatility expected as a result.
Related: CLARITY Act vote meets Fed rate hike: Five things to know in Bitcoin this week
An overall muted response to last week’s Consumer Price Index (CPI) inflation data, it argued, means that Fed officials’ language now mattered more than the decision itself.
“This containment reflects a shift in focus: the binary question of whether the Fed will hike has been answered; the critical issue for positioning is now how policymakers frame the move and what it signals about the path ahead,” it wrote.
BTC/USD returned above its 50-week exponential moving average (EMA) at $77,430 on Monday after initially closing the weekly candle below it. As Cointelegraph reported, the 50-week EMA represents a key support target for Bitcoin bulls to reclaim as part of a bull-market comeback.
