Bitcoin hit $71,612 on Tuesday night and fell back to $70,036 during the Asian session on Wednesday. Changes in the energy situation boosted risk appetite in global markets.
A key catalyst was a Wall Street Journal report that the International Energy Agency proposed releasing the largest crude oil reserves in its history, surpassing the 182 million barrels released in 2022 after Russia invaded Ukraine.
The proposal comes in response to production cuts in the Persian Gulf, which has reduced global oil production by about 6% since the outbreak of the Iran war, causing global prices for jet fuel and cooking natural gas to soar.
Brent crude oil fell below $90 on Wednesday after plunging 11% in the previous session. This matters for cryptocurrencies because oil has been the transmission mechanism connecting conflict in the Middle East to every risk asset on the planet. Higher oil prices mean higher inflation, which means no interest rate cuts, which means tighter liquidity and further pressure on risk assets.
Bitcoin was trading at $70,036 on Wednesday morning and hit a high of $71,612 on Tuesday night, up 2.5% for the week. From Monday’s low near $66,000 to Tuesday’s high, the two-day gain was about 8.5%, although an overnight pullback gave back some of the gains.
“Bitcoin trading above $70,000 shows that buyers are trying to push this market out of consolidation, but it still needs to prove it can sustain,” ZeroStack CEO Daniel Reis-Faria said in an email. “The difference this time is that leverage has cooled down a bit before moving higher, which gives it a more stable setup.”
He added: “The question now is whether Bitcoin can hold and build above $70,000, or whether it will return to the pattern we have been in for several weeks.”
On the other hand, FxPro analysts pointed out that Bitcoin is forming a series of higher local lows since the end of February, which is the first structural sign that buyers are gaining confidence in this range.
But they mark $73,000 as an important level, where last week’s peak and the 50-day moving average sit.
The market is calm. Ethereum price remained at $2,034, down 0.3% on the day but up 2.8% for the week. BNB was unchanged at $643. XRP edged up 0.3% to $1.38, for a weekly gain of 1.7%. Solana rose 0.2% to $86.42, but was still down 0.8% in seven sessions and remained the weakest major currency on a weekly basis.
Dogecoin rose 1% to $0.093, extending some of the gains driven by Musk on Tuesday.
The Fed meeting on March 17-18 remains the next big thing. The stagflation scenario priced in by markets last week looked slightly less severe as a release of reserves from the International Energy Agency could ease oil prices.
If crude oil prices stay below $90, the case for a rate cut later this year strengthens slightly. Bitcoin’s 90-day correlation with the S&P 500 remains at 0.78. Whatever signals the Fed sends, cryptocurrencies will trade them.
