Bitcoin Back Above $65,000 as US and Iran Hold Fire, Oil Drops Sharply

Bitcoin climbed back above $65,000 on Monday, up roughly 1.2% over 24 hours, after the United States and Iran held fire for a second consecutive day, sending oil prices sharply lower and easing the inflation fears that had weighed on risk assets last week.

Key Takeaways

• WTI crude fell around 5%, with Brent dropping as much as 6-7% to roughly $92, reversing much of last week's spike toward $100

• Ether outperformed bitcoin, rising over 3% to near $1,950, approaching the $2,000 level for the first time since early June

• The move comes just ahead of Wednesday's Fed meeting, where markets now assign roughly a 30-36% chance of a rate hike, down from higher odds last week.

What Changed

The US and Iran paused military strikes for a second straight day, with Iran reportedly signaling it would continue holding fire as long as the US did the same. Oil dropped hard on the news, easing one of the clearest inflation risks markets had been pricing in. That, in turn, trimmed the odds of a Fed rate hike at this week's meeting, a genuine risk-on catalyst across both crypto and traditional markets. The Australian dollar and euro both gained against the US dollar in the same move.

The connection here is direct: energy prices feed straight into inflation expectations, and inflation expectations are one of the clearest inputs into how the Fed is expected to move on rates. When oil drops this sharply, it doesn't just ease costs at the pump, it changes the calculus for the entire risk-asset complex, crypto included.

Why Ether Is Outperforming

Ether's gain of over 3%, compared to bitcoin's roughly 1.2%, is worth noting on its own. Bitcoin's market dominance remains high at around 58.6%, so this isn't yet a broad altcoin rally, more a signal that some capital is starting to rotate toward ether specifically as risk appetite improves. CoinEx chief analyst Jeff Ko expects bitcoin to stay largely range-bound near current levels, pointing to the retreating oil price, a 4.7% 10-year Treasury yield, and a heavy week of megacap earnings as the factors keeping the market calm rather than pushing sharply in either direction.

What's Next

The CME FedWatch tool currently prices in roughly a 30-36% probability of a 25-basis-point rate hike at Wednesday's FOMC meeting, down from higher odds priced in before the oil price drop. That meeting is the next clear catalyst for both crypto and broader risk assets; if the Fed holds rates, it could reinforce the recent risk-on sentiment in crypto and other risk assets. A surprise rate hike could quickly reverse that sentiment.

Roughly $312 million in crypto positions were liquidated across the market in the past 24 hours as the move caught some traders offside, a reminder that even a constructive macro shift can trigger real volatility in leveraged positions.

Understanding how macro catalysts like Fed decisions and geopolitical shifts move crypto markets is part of the context TradeMesa analysts weigh before publishing a signal. See what a trading signal is →

This article covers market conditions as of publication time and does not constitute financial advice. Crypto markets are highly volatile. Full Risk Disclaimer →