Bitcoin adds to overnight gains in early U.S. trading Friday, continuing to show strong relative price action after several months of underperformance for assets like stocks and precious metals.
Trading at $73,800, bitcoin is up nearly 5% in the past 24 hours, with most of those gains coming after U.S. Treasury Secretary Scott Bessent said late Thursday that the Trump administration was taking concrete steps to try to cap soaring oil prices.
Bitcoin is now up about 11% since the start of the Iran war, outperforming U.S. stock indexes and gold, both of which have lost ground since the bombings began about two weeks ago.
WTI oil is trading at $94.50 a barrel on Friday, down from Thursday’s high of nearly $98. US stocks posted gains of around 0.5%.
Oil increases the risk of stagflation
The recent surge in oil prices is putting direct pressure on household budgets and, if sustained, could weaken consumer spending and slow economic growth, according to Olu Sonola, head of U.S. economics at Fitch Ratings.
“Yes, the economy as a whole is still expected to grow on trend, but those forecasts look increasingly fragile as downside risks accumulate. … The Fed can ignore pockets of weakened growth, but resurgent inflation severely limits its room for maneuver, leaving policy potentially stuck for months,” he wrote in a note.
Backup rebound
After a period of some of the worst sentiment in Bitcoin history, it is perhaps unsurprising that there have been modest gains of late.
Funding positioning of perpetual futures traders has been negative for the longest period since late 2022, noted K33 Research analyst Vetle Lunde. This means that traders who short Bitcoin pay for long positions to keep their trades open, resulting in a negative funding rate. The end of 2022, of course, coincided with the aftermath of the FTX crash, when BTC traded around $16,000 compared to $69,000 a year earlier.
The 30-day average funding rate has now been negative for 14 consecutive days, the longest since December 2022, Lunde highlighted. These negative trends coincided with the lowest local prices over the past seven years, he added.
At the same time, bitcoin open interest on perpetual and dated futures rose 9% over the past 24 hours to around 700,000 BTC, the highest level since February 6. Add it all up, and it creates the conditions for a short squeeze.
Friday’s gain
The day isn’t over yet, but it would be the first Friday gain since the Middle East conflict began on February 27. This could suggest a less volatile weekend for the crypto, which has made a habit of falling on Saturdays and Sundays in recent weeks.
March is also shaping up to be a turning point for bitcoin. The asset is up about 8% so far this month. Again, it’s early, but a breakthrough in March would break BTC’s five-month losing streak.
