On April 21, Brent crude oil saw a 5.4% increase, closing at $99.89 with an intraday peak of $102.16, as transit through the Strait of Hormuz was severely restricted to just three ships in the past day from about 140 before hostilities began. The International Energy Agency’s Fatih Birol described this scenario as the ‘largest energy crisis’ ever and coordinated a historic release of 400 million barrels from reserves in March.
The energy shock has had immediate repercussions for financial markets, evidenced by U.S. retail sales surpassing forecasts in March, largely due to a 15.5% increase in gasoline station receipts driven by elevated fuel prices stemming from the conflict. This linkage between oil prices and consumer-level inflation is already reflected in rate market expectations.
On April 21, Brent crude settled at $99.89 after rising by 5.4%, peaking intraday at $102.16, as Hormuz traffic dwindled to three ships per day compared to a pre-conflict average of about 140. The current trading scenario for Bitcoin hinges on the persistence of high oil prices, potentially keeping inflation elevated, yields steady, and Fed rate cuts postponed beyond market expectations.
As recently as late February, Fed funds futures anticipated two quarter-point reductions by December. However, by April 21, they only indicated a 30% likelihood of a single 25 basis point cut for the year, directly tied to the conflict’s impact on energy prices. Concurrently, the 10-year Treasury yield was at 4.313%, and the 2-year yield stood at 3.802%, both rising during the session.
On April 21, oil prices increased, strengthening the dollar and driving up Treasury yields while Bitcoin remained stable. Even traditional inflation hedges like gold fell by 2% as higher real financing conditions and a robust dollar overrode typical narratives. Deutsche Bank highlighted on an April 17 call that due to oil-fueled inflation, the Fed might maintain rates unchanged through 2026.
A ceasefire announcement on April 7 led Brent crude to drop to $92.55 the following day, reducing yield pressures and raising the chances of a Federal Reserve cut by year-end to 50%, which saw Bitcoin climb 2.95% to $72,738.16. This sequence confirmed that softer oil prices ease rate expectations, benefiting Bitcoin.
Macro indicators on April 21 included:
– Brent crude closing at $99.89 with an intraday high of $102.16, exerting inflationary pressures and complicating macroeconomic conditions.
– The Fed path revised from two expected cuts by December in late February to a mere 30% probability of one 25 bp cut for the year, implying reduced liquidity support for Bitcoin.
– A 10-year Treasury yield at 4.313% and a 2-year yield at 3.802%, reflecting tighter financial conditions.
– A stronger dollar on April 21 typically poses challenges for Bitcoin and other risk assets.
– Gold declined by 2%, highlighting pressure from yields and dollar strength even on classic inflation hedges.
Bitcoin’s recovery to the high-$70,000s, trading around $78,000 on April 22, underscored its macro sensitivity but not complete capitulation. The current situation hinges on how Bitcoin navigates the tension between these headwinds while remaining near $78,000.
For this week, if Brent crude remains above $100 and the 2-year Treasury yield continues to rise from its current 3.80%, it signals persistent inflation, fewer anticipated rate cuts, and tighter liquidity conditions. In such a scenario, Bitcoin would likely test lower support around the mid-$70,000s, reinforcing its characterization as a high-beta, rate-sensitive asset.
Conversely, if Brent crude remains near $100 without accelerating, yields remain elevated rather than collapsing, and Bitcoin holds steady or strengthens around $78,000, it suggests resilience despite macroeconomic pressures. A week of such firmness in these conditions would undermine the “oil up equals BTC down” narrative established by current events.
Key metrics to monitor this week include Brent crude prices, the 2-year Treasury yield, and Bitcoin’s ability to maintain levels above the mid-$70,000s. The post titled ‘Bitcoin price surges to $78k even as oil rises again creating new setup – what you need to know’ first appeared on CryptoSlate.