Bitcoin fell below $65,000 on Friday, dragged down by a sharp escalation in the US-Iran conflict that sent oil prices above $100 a barrel and triggered a broad risk-off move across global markets. The drop marks the first time the largest cryptocurrency has traded under that level in two weeks, and traders are now watching for further downside as geopolitical uncertainty deepens.
Oil, bonds, and the flight from risk
The trigger was clear: fresh military exchanges between the US and Iran pushed crude past the symbolic $100 mark for the first time this year. That spike in energy costs, combined with a surge in bond yields as investors priced in higher inflation, hit risk assets hard. Bitcoin, often touted as a hedge, moved in lockstep with equities instead — a pattern that's held during most macro shocks this year.
The yield on the 10-year Treasury climbed about 15 basis points in the session, adding pressure to growth-sensitive assets. Crypto markets, already nursing losses from earlier in the week, saw selling accelerate into the afternoon.
Rate hike odds creep higher
Adding to the sour mood: the odds of a Federal Reserve interest rate hike in July are now approaching 40%, according to CME FedWatch data. That's up from roughly 25% just a week ago. A hike would be the first in over a year and would mark a sharp reversal from the dovish stance the Fed had maintained through the spring.
Higher rates tend to drain liquidity from speculative corners of the market, and crypto has historically been among the first to feel the pinch. The combination of a geopolitical shock and a hawkish repricing of Fed expectations is a tough one for bitcoin to shake off.
What traders are watching next
The immediate focus is on whether the US-Iran situation de-escalates or spirals further. Diplomatic channels remain open, but no concrete talks have been announced. On the Fed side, the next policy decision is due July 29 — just five days away. If the odds of a hike keep climbing, bitcoin could test support near $62,000, a level that held during a selloff in early June.
For now, the market is in wait-and-see mode. But with oil above $100 and a potential rate hike on the table, the path of least resistance looks lower.
