Bitcoin Steadies as Iran-U.S. Pause Sends Oil Tumbling, Lifts Risk Assets
In brief
- U.S.-Iran pause over Strait of Hormuz sent Brent crude from $100+ to $87 per barrel
- Bitcoin traded near $65,200; Ether rose 0.51% to $1,963, approaching $2,000 for first time since early June
- Nasdaq 100 futures gained 1.36%; S&P 500 futures rose 0.80% as risk appetite returned
- Fed rate-hike odds fell to 30.5% Wednesday from 37.4% Friday amid easing inflation concerns
Oil Collapse Eases Inflation Fears
The U.S. and Iran paused strikes over the Strait of Hormuz, sending Brent crude tumbling from above $100 to around $87 per barrel as mediators continued talks. The move deflated near-term inflation concerns that had gripped markets since the geopolitical flare-up began. Inflation was running at 4.1% on the back of the oil surge, but the pause offered relief.
Gold and silver both rose on Monday as inflation fears unwound. The commodity rally reflected a broader shift in market sentiment — risk assets rebounded as traders repriced the probability of aggressive Fed action.
Crypto and Equities Respond
Nasdaq 100 futures rose 1.36% on Monday, and S&P 500 index futures rose 0.80%. Bitcoin steadied but didn't surge. Bitcoin traded at $65,200 since midnight UTC, down from $65,600 at the start of Sunday futures trading.
Ether outperformed. Ether rose 0.51% to $1,963 on Monday, approaching the $2,000 level for the first time since early June. The broader market moved in tandem. The CoinDesk 20 Index gained 0.1% since midnight UTC and 1.6% over 24 hours.
The Fed Decision Looms
The real pivot hinges on Wednesday. The Federal Reserve was meeting this week to decide on a potential interest rate increase, marking a decision on whether to raise interest rates for the first time in three years. Markets had priced in a rate hike earlier in the week, but the Strait of Hormuz pause shifted that calculus.
Markets priced a 30.5% chance of a Fed rate hike on Wednesday, down from 37.4% at Friday's close. That 6.9-percentage-point drop reflects the rapid repricing of inflation risk once the geopolitical tension eased. If the Fed holds rates steady, crypto and equities could extend the bounce. If it hikes anyway, volatility will likely return.
