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Bitcoin BTC$64,585.23 has fallen in the past 24 hours to $62,600 as traders exited riskier investments amid growing inflation concerns tied to rising oil prices.
Brent crude is up nearly 4% in the period, reflecting the renewed open conflict between the U.S. and Iran. That’s reigniting the so-called Nacho (Not a Chance Hormuz Opens) trade, which bets the strategic waterway stays shut.
The broader CoinDesk 20 (CD20) index lost 0.6% of its value over the same period while equities benchmarks in Europe are down about 1% and U.S. index futures 0.3%.
Attacks on tankers have reduced traffic through the Strait of Hormuz, which carried about one-fifth of global oil and gas supplies before the conflict and has been de-facto closed for 136 days. Oil prices reached a four-week high after hostilities restarted.
The move reverses part of the peace trade that helped bitcoin recover from its late-June lows. Higher oil prices raise near-term inflation risks, pushing up Treasury yields and reducing demand for rate-sensitive assets.
The renewed fighting saw the perceived odds of Hormuz reopening by the end of the year drop from 65% to 56%. Traders see next to no chance of a reopening by month's end.
Prediction markets assigned a 36% chance of a Federal Reserve interest-rate increase this month. The shift has pushed the two-year Treasury yield to 4.28%, extending a rate-hike trade that has previously pressured bitcoin and gold.
June CPI is the next test, and it's due later today. Headline inflation is expected to have slowed to 3.8% from 4.2% from a year ago, while core inflation is forecast to hold at 2.9%.
A soft print could reduce July interest-rate hike bets, while hotter-than-expected data would likely cement the possibility. Stay alert!
Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead."
The plot shows the ratio of altcoin market capitalization (excluding the Top 10 tokens) to bitcoin market cap on a weekly basis.
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