Bitcoin Holds $70,000 as IEA’s Record Oil Release Cools Inflation Fears
The world’s largest cryptocurrency has discovered an unlikely ally: the International Energy Agency. As reported by CoinDesk, bitcoin briefly climbed to $71,600 before settling back near $70,000 this week, buoyed by news that the IEA is proposing its largest-ever release of emergency crude reserves to counter production disruptions caused by the Iran conflict.
When the Wall Street Journal reported that the IEA would convene an extraordinary meeting to authorize the release of up to 400 million barrels of oil, Brent crude fell below $90 for the first time since the conflict began – a drop of roughly 11% within the hour. Easing energy prices reduce the likelihood of a renewed inflationary surge, which in turn softens the case for further central-bank tightening. In a market where bitcoin’s 90-day correlation with the S&P 500 sits at 0.78, according to CoinDesk, that logic flows swiftly into crypto.
Analysts quoted by CoinDesk identified $70,000 as a key support level and $73,000 as a critical resistance, with the Federal Reserve’s March 17-18 meeting looming as the next major test.
Should crude stay below $90, the argument for rate cuts later in the year grows marginally stronger – and with it, appetite for risk assets. Spot bitcoin ETFs recorded approximately $568 million in net inflows last week, suggesting institutional conviction has not yet broken.
The relief, though real, remains conditional. One flare-up in the Gulf, one hawkish word from Jerome Powell, and the oil-driven reprieve could evaporate as quickly as it arrived.
Seven Central Banks, One Big Question for Bitcoin
Meanwhile,seven major central banks – among them the Federal Reserve, the Bank of Canada, and the Bank of Japan – will deliver rate decisions within days of one another, just as war-driven oil price spikes threaten to reignite global inflation.Traders are reassessing expectations for rate cuts as higher energy costs threaten to keep inflation elevated, raising the risk that policymakers adopt a more hawkish stance – one that could spark volatility and downside pressure in bitcoin and other risk assets.
The stakes are sharpened by institutional memory. Policymakers, still stung by their 2021–22 misstep of calling inflation transitory, may move quickly to curb rising price pressures this time.Yet caution may also prevail. As economist and Fed watcher Ethan Harris noted in CoinDesk, oil shocks simultaneously lower growth and raise inflation, leaving the Fed to first “watch and assess the damage” before acting.
Bitcoin traders are still optimistic
And yet, sentiment in bitcoin’s options market has turned decisively bullish. As reported by CoinDesk, options pricing now implies roughly a 35% probability that Bitcoin will trade above $80,000 by the end of June – a sharp shift in sentiment – with measures of options skew rebounding from deeply negative levels in February to around plus 10%, indicating traders are dialling back crash hedges and expecting more stable or rising prices.
Nick Forster, founder of on-chain options platform Derive.xyz, told CoinDesk that the recovery in skew, combined with current options pricing, suggests many traders expect bitcoin to recover toward the $80,000 level between June and September.
Whether options optimism translates into reality will depend heavily on next week’s central bank decisions.