Bitcoin fell below $65,000 on Thursday, trading near $64,980, as a surge in oil prices and escalating geopolitical tensions in the Middle East rattled risk assets. The move came as Brent crude settled above $100 for the first time since May, and President Donald Trump threatened "major military punishment" against Iran and the Houthis after attacks on two Saudi oil tankers in the Red Sea.
Oil spikes, bonds sell off
Brent crude oil settled at $100.69 on July 23, its first close above $100 since May, then retreated to about $96.70. It was on track for a weekly gain of almost 10%. The 10-year US Treasury yield climbed to roughly 4.7%, its highest since January 2025. Higher oil prices risk keeping inflation elevated, limiting the Federal Reserve's room to ease policy. CME FedWatch placed the probability of a quarter-point rate increase at the July 28-29 meeting near 40%.
Geopolitical flashpoint
The attacks on two Saudi oil tankers in the Red Sea prompted Trump to threaten Iran and the Houthis with military retaliation. The US completed a 13th consecutive night of strikes against Iran with little indication of de-escalation. The escalation raised concerns over energy flows already disrupted by reduced traffic through the Strait of Hormuz.
Bitcoin ETFs snap inflow streak
US-listed spot Bitcoin ETFs posted $225.2 million in net outflows on July 23, snapping a seven-session inflow streak. The ETFs had taken in nearly $1 billion during the prior seven-session inflow run. CryptoQuant data showed spot demand for Bitcoin has been largely negative or flat since June, while futures demand is positive but well below levels from three months earlier.
Macro headwinds mount
André Dragosch, head of research for Europe at Bitwise, said a sustained rise in oil could push the 10-year Treasury yield above 5%. Major oil importers such as Japan may need to raise cash as their energy bills increase, potentially creating another source of selling in US Treasuries. Jurrien Timmer, Fidelity Investments’ director of global macro, said rising term premiums could weigh on both bonds and equities simultaneously due to positive correlation. The S&P 500 fell 1.2% and the Nasdaq Composite lost 2.2% on July 23.
Bitcoin is struggling to preserve gains around $65,000. With the Fed meeting next week and oil prices still elevated, the path of least resistance for risk assets looks uncertain.
