Bitcoin Takes $390M Hit as Oil Shock Lifts Inflation Fear

A $390 million shock hit Bitcoin last week, with institutions pulling that sum out of spot Bitcoin exchange-traded funds (ETFs).

The selling is linked to an oil and fertilizer shock flagged by JPMorgan in April. Brent crude prices surged above $88 a barrel after the US said its naval blockade of Iran could run indefinitely.

JPMorgan warned that the blockage would lift global food inflation, with nitrogen fertilizer benchmarks jumping 25-50% after the conflict began. The World Bank's fertilizer index is near its highest since 2022.

The connection between the oil shock and Bitcoin comes down to inflation. Sticky energy and food costs give the Federal Reserve reason to keep rates high, draining cheap liquidity that risk assets rely on.

Whales, wallets holding over 1,000 BTC, started selling before the ETFs did. Their 30-day change turned net negative around August 10 as oil prices climbed. The largest holders were cutting exposure as the inflation threat hardened.