Key Points:
- Bitcoin rose to $72K. The market is reacting to increased recession risks and a weak dollar.
- Meanwhile, oil is rising, and the situation with Iran remains tense. If pressure increases, the recent BTC rally could quickly fade.
On Thursday, BTC again consolidated above $72,000, even despite weak U.S. economic data and rising inflation.
WTI crude oil jumped to $97 after Iran accused the U.S. and Israel of violating the ceasefire. This added nervousness to the market. If tensions continue to rise, BTC could fall below $68,000.
S&P 500 futures and WTI crude oil. Source: TradingView
The connection between oil and risk assets has resurfaced. After Donald Trump‘s statement about a ceasefire, the market jumped: S&P 500 futures hit a 30-day high, and WTI oil fell below $100.
Now the mood has changed. Market participants do not believe the ceasefire between the U.S. and Iran will last long.
If the conflict escalates again, markets will react quickly. In this scenario, bitcoin could also go down.
Fragile Ceasefire With Iran and Weak U.S. Economic Data Hold Back Bitcoin Growth
Iranian parliament speaker and former IRGC general Mohammad Bagher Ghalibaf said Israel’s actions are hindering ceasefire talks. He cited the operation in Lebanon against Hezbollah, drone flights over Iranian territory, and restrictions on uranium enrichment as reasons. This was reported by Yahoo Finance.
U.S. statistics, on the other hand, slightly supported the market. The core PCE index rose by 0.4% for the month in February.
But the economy is weakening. U.S. GDP growth for the fourth quarter was revised down to 0.5% year-over-year. This increases talk of a possible recession.
U.S. dollar index and BTC/USD pair. Source: TradingView
The market is now pricing in a simpler scenario. If the economy starts to slow, U.S. authorities will likely turn the printing press back on and support markets with liquidity.
Because of this, investors are less afraid of risks. Even with persistent inflation, money could still flow into the market.
In addition, confidence in the Fed’s ability to handle a recession without triggering inflation is declining. Against this backdrop, the dollar is weakening against a basket of other currencies.
Risks Around AI Infrastructure and Private Lending Are Not Yet Pressuring the Market
The connection between bitcoin and the U.S. stock market remains unstable, but in times of declining real yields, investors are increasingly seeking safe-haven assets. Bitcoin is not considered a reliable hedge against fiat currency depreciation, but a weak dollar still supports demand for limited assets.
30-day BTC/USD and S&P 500 correlation. Source: TradingView
On Thursday, the S&P 500 was just 2% off its all-time high. It seems investors are not yet worried about problems in private lending or rising costs at AI companies.
Essentially, bitcoin is now reacting more to expectations around the Iran conflict than to weak U.S. macroeconomic data.
See Also: Japan Reclassifies Cryptocurrencies as Financial Instruments
At the moment, recession risks are playing in favor of limited assets. Therefore, there are still no clear reasons to believe that inflation or the labor market situation could trigger a sell-off.
