Middle East Tensions Send Bitcoin Price Down 2% as Oil Rises Above $105
Bitcoin's price fell by over 2% on Thursday as oil prices surged above $105 per barrel, driven by renewed tensions in the Middle East. The conflict between Iran and the US intensified earlier this week, with Tehran-backed Houthis in Yemen targeting Saudi Arabian assets.
The attacks added pressure to crude prices, which can raise inflation by increasing transport, production, and household energy costs. This, in turn, makes interest rate cuts less likely when central banks are trying to control price growth.
Federal Reserve Chair Kevin Warsh said that US inflation had not fallen enough, adding pressure on risk assets. As a result, traders increased bets that the Federal Reserve could raise interest rates at its next policy meeting.
Bitcoin has often reacted to changes in US monetary policy, with lower rates supporting demand for risk assets and tighter policy reducing liquidity. The cryptocurrency's price had performed strongly in August after US Treasury buyback plans weakened the dollar and supported alternative assets like Bitcoin and gold.