Oil prices smashed through $90 a barrel on Monday, with Brent crude climbing more than 3% to its highest level since mid-June. The surge — driven by the US-Iran war choking shipping through the Strait of Hormuz — is undoing June's inflation drop and pushing the Federal Reserve closer to a rate hike. Bitcoin, already struggling to hold its recovery, is feeling the heat.
Oil shock revives Fed hike bets
Brent crude traded near $91.40 early Monday, up 3.2%, capping a 14% jump last week and rebounding nearly 30% from its early-July low near $71. The trigger: President Donald Trump ended a truce on July 8 that had reopened the strait on June 17, bringing the war premium back. Kuwait reported Iranian strikes hit a power and water plant twice in two days.
The oil shock is hitting just as the Fed was starting to see progress on inflation. US prices fell 0.4% in June because energy got 5.7% cheaper. That's gone. The 10-year Treasury yield sits near 4.55%, close to a two-month high. Fed Chair Kevin Warsh held rates steady in June, and nine of his 18 colleagues see higher rates this year. At a central-bank forum on July 1, Warsh stated: 'Prices are too high.'
Hike odds for the July 28-29 Fed meeting doubled to 36% from 18% in early July, then fell to 14% as of writing. But if oil holds above $90, a Fed hike could move from tail risk to base case. Economists also expect an ECB rate hike in September.
Bitcoin sellers fade every bounce
High rates hurt risk assets, and Bitcoin is showing the strain. The largest cryptocurrency is struggling to hold its recovery — sellers fade every bounce, according to market observers. Silver slumped as the oil shock lifted Fed hike bets, and crypto is following the same script. The timing isn't great: Bitcoin had been trying to build momentum after a rough second quarter, but macro headwinds are piling up again.
Stocks beat BTC as war hedge in first phase
A BeInCrypto study of the first phase of the conflict — from February 28 to June 17 — found that stocks outperformed Bitcoin as the strongest war hedge. That's a blow to the narrative that crypto is digital gold. If the pattern holds, the current oil-driven selloff could hit Bitcoin harder than equities.
The next concrete test comes at the Fed's July 28-29 meeting. If oil stays above $90, the 14% hike odds could climb again. For now, Bitcoin is stuck waiting — and the waiting isn't comfortable.
