Bitcoin slides as Oil surges and rising yields tighten financial conditions

Bitcoin is retreating after briefly moving above 70k on Monday, pulled lower alongside other risk assets as concerns mount over a prolonged conflict in the Middle East. 

The largest cryptocurrency fell as much as 4% to 66.3k before stabilising near 67k, down 2.5% on the day, although BTC remains within the 65k-70k range from February. Broader crypto markets are also under pressure, reversing Monday’s gains as risk sentiment deteriorates. 

The risk-off tone is more pronounced across traditional markets. While Wall Street closed modestly higher on Monday, US futures are sharply lower today, with European equities down around 4% and South Korea’s Kospi falling 7%. The US dollar has strengthened to a six-week high. Gold, despite its safe-haven status, is trading lower as dollar strength offsets safe-haven flows. 

Oil soars, lifting inflation worries 

Oil prices continue to surge, rising 7% today and extending weekly gains to 14%. The closure of the Strait of Hormuz — a key shipping route accounting for roughly 20% of global seaborne oil supply and LNG flows — has intensified supply concerns. Prolonged disruption risks pushing energy and food prices higher, reintroducing inflationary pressures into the global economy. 

Rising energy prices complicate the outlook for central banks. Persistent or rising inflation could delay or reduce the scope for further rate cuts. Treasury yields are climbing, the U.S. 10-year treasury yield has risen above 4.09%, and markets have pushed back expectations for Federal Reserve easing. This tightening in financial conditions poses a headwind for liquidity-sensitive assets such as Bitcoin. 

Is BTC a risk asset rather than a store of value? 

Bitcoin’s reaction underscores its integration into the broader macro landscape. Rather than trading as a geopolitical hedge, as it appeared to be yesterday, BTC is responding to higher yields, a stronger dollar, and rising inflation expectations — behaving more like a high-beta risk asset than a defensive store of value. 

However, there is another side to this argument: while risk aversion and liquidity worries are negative for Bitcoin, the cryptocurrency, like Gold, can benefit from inflation concerns. This could explain the resilience that we saw in BTC over the weekend and on Monday. 

BTC direction now likely hinges on whether tensions escalate further or begin to de-escalate. Currently, there are few signs of de-escalation from either side. Trump warned that the conflict could last weeks. Any reopening of the Strait of Hormuz or signs of diplomatic progress could ease oil prices, reduce inflation fears, and restore risk appetite. Until then, elevated uncertainty and tighter liquidity conditions may continue to weigh on crypto alongside other risk-sensitive assets. 

BTC technical analysis 

Having recovered from the 60k, 18-month low, BTC/USDT continues to consolidate in a familiar range around 65-71k.  The price has recovered above the 20 SMA at 67.3k but has once again failed to push above 70k. The RSI is at 45, favouring sellers. 

Sellers will need to close below the 65k level to extend the move lower towards 60k. A break below here opens the door to a deeper selloff towards 55k. 

Should momentum improve, buyers will look to rise above 70k-71k to break out and extend gains towards 75k-76k, the round number and 50 SMA ahead of 80k.