Bitcoin faces renewed sell pressure amid an oil price surge, Japan economic contagion risks and a fresh round of selling from Strategy.
Bitcoin traded down 3.5% on Wednesday as new developments in the US-Iran war pushed oil prices higher and Japan’s bond markets faced renewed stress. That combination triggered broader de-risking across markets. At the same time, concerns over potential Bitcoin sales from Strategy intensified, with traders now bracing for a possible correction below $60,000.
Nasdaq-100 futures (left) vs. Bitcoin/USD (right). Source: TradingView
Bitcoin’s failed attempt to reclaim $64,500 on Monday coincided with a downtrend in the tech-heavy Nasdaq Index. However, the stock market recovered some of its losses on Wednesday while Bitcoin was unable to bounce back from the $62,000 level. This underperformance suggests something else might be pressuring the cryptocurrency.
The surge in Brent crude oil to $74 from $68 the prior week raised inflationary risks due to disruptions in energy supplies following the official breakdown of the US-Iran memorandum of understanding. US President Donald Trump declared the deal “over” after US strikes targeted Iranian sites in response to vessel attacks.
Higher energy costs feed directly into broader price pressures, reducing the likelihood of near-term Federal Reserve (Fed) interest rate cuts and limiting odds of economic stimulus packages.
Implied odds for FED Funds target rate on Sept. 16. Source: CME FedWatch Tool
Traders are currently pricing 69% odds of interest rate hikes by September, up from 42% one month prior. This environment weighs heavily on risk assets, with Bitcoin still not widely perceived as an effective hedge.
Adding to the cautious mood, President Trump demanded an end to US trade with Spain at the NATO summit, labeling the key ally a “wasted cause” for failing to commit to new defense spending targets. Such trade frictions risk slowing global economic activity and amplifying fears of global economic contraction.
Japan 10-year government bonds yield. Source: TradingView
In Japan, government bond yields jumped to a 30-year high, reflecting fears over a lack of central bank independence as the government attempts to adjust the Japan Central Bank’s policy mandate to “achieve a stronger economy.” Japan is the largest foreign holder of US Treasuries, which heightens the risk of global contagion.
The latest round of Bitcoin sales, totaling $216 million, announced by Strategy (MSTR US) on Monday, negatively surprised many after it was revealed that they occurred outside the core $1.25 billion Monetization Program. The company’s 8-K filings stated the program accounts only for proceeds used to fund its cash reserves.
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