Bitcoin’s price fell nearly 4% over a 24-hour period on Wednesday morning in New York, trading at $83,062 after dipping as low as $82,823. This decline coincided with a surge in oil prices, where Brent crude jumped above $102 following increased Iranian attacks on vessels in the Strait of Hormuz. The energy spike heightened fears that the Federal Reserve might raise interest rates again, especially after the central bank hiked rates last month. Consequently, U.S. mortgage rates climbed for a seventh consecutive week to their highest level in nearly three years.
Market data from Coinglass indicated that approximately $178 million in long bets on Bitcoin were closed during this period. The sell-off was not isolated to crypto; gold, silver, and stocks also declined amid the broader asset downturn. Despite this short-term volatility, analysts noted that Bitcoin had recently entered a bull market after rising above its 365-day moving average and posting its best quarter in years. The asset had previously shrugged off both the Fed's rate hike and the blocking of the Clarity Act by lawmakers.
The correlation between Bitcoin’s price action and traditional macroeconomic indicators underscores its sensitivity to liquidity conditions rather than its status as an uncorrelated safe haven. The immediate reaction to Brent crude surpassing $102 and the subsequent rise in mortgage rates highlights how geopolitical tensions in the Strait of Hormuz directly impact risk assets through the channel of anticipated monetary tightening. Investors are pricing in the likelihood that the Federal Reserve will maintain or increase borrowing costs to combat inflation, which historically pressures high-duration assets like cryptocurrencies.
While the technical narrative suggests a continued bull market based on the 365-day moving average, the fundamental headwinds remain potent. The political climate surrounding the November 3 elections adds another layer of uncertainty, as affordability concerns linked to surging inflation could influence regulatory postures. Market participants should monitor whether the recent liquidation of $178 million in long positions represents a temporary shakeout or the beginning of a deeper correction driven by sustained higher-for-longer interest rate expectations.
