Bitcoin touched $71,612 late Tuesday before returning to $70,036 during Wednesday’s Asian session, as a change in the energy situation brought back risk appetite in global markets.
A key catalyst was a Wall Street Journal report that the International Energy Agency had proposed the largest release of crude reserves in its history, surpassing the 182 million barrels released in 2022 after Russia’s invasion of Ukraine.
The proposal responds to Persian Gulf production cuts that have removed about 6% of global oil production since the start of the war in Iran, sending jet fuel and cooking gas prices skyrocketing around the world.
Brent crude fell below $90 on Wednesday after plunging 11% in the previous session. This is important for crypto because oil has been the transmission mechanism connecting the Middle East conflict to every risk asset on the planet. Higher oil means higher inflation, which means no rate cuts, which means tighter liquidity and increased pressure on risk assets.
Bitcoin was trading at $70,036 on Wednesday morning after hitting $71,612 on Tuesday evening, up 2.5% for the week. The move from Monday’s low near $66,000 to Tuesday’s high amounts to about 8.5% in two days, although the overnight pullback gave back some of those gains.
“Bitcoin trading above $70,000 indicates that buyers are trying to move this market out of consolidation, but it has yet to prove that it can hold,” Daniel Reis-Faria, CEO of ZeroStack, said in a letter. “The difference this time is that the leverage has cooled down a bit before going up, giving it a more stable setup.”
“Now it’s a question of whether Bitcoin can stay above $70,000 and grow from there, or whether it will fall back into the same pattern we’ve been in for weeks,” he added.
Elsewhere, FxPro analysts noted that Bitcoin is forming a series of higher local lows since late February, the first structural sign of renewed buyer confidence in this range.
But they flagged $73,000 as the level that matters, where last week’s high and the 50-day moving average come together.
The market as a whole was calm. Ether held steady at $2,034, down 0.3% on the day but up 2.8% on the week. BNB was stable at $643. XRP edged up 0.3% to $1.38 with a weekly gain of 1.7%. Solana added 0.2% to $86.42 but remains down 0.8% over seven days, remaining the weakest major on a weekly basis.
Dogecoin rose 1% to $0.093, retaining some of Tuesday’s gains generated by Musk.
The Fed meeting on March 17-18 remains the next major event. With the possibility of a slowdown in oil following the release of IEA reserves, the stagflation scenario that was priced into markets last week appears slightly less severe.
If crude stays below $90, the argument for a rate cut later this year becomes slightly stronger. Bitcoin’s 90-day correlation with the S&P 500 is still at 0.78. Regardless of the signals from the Fed, cryptocurrencies will trade it.
