Bitcoin has fallen below $65,000 as soaring oil prices and rising U.S. Treasury yields have triggered a widespread exit from risk assets.
data from crypto slate It shows that the largest cryptocurrency traded around $64,980 as Brent crude oil maintained its weekly upward trajectory of almost 10%. Crude oil prices rose 7% to settle at $100.69 per barrel on July 23, the first time since May that the oil price had closed above $100, but as of this writing it had fallen to about $96.70 in European trading.
This move spread to the global market. On July 23, the yield on the 10-year U.S. Treasury rose to about 4.7%, its highest level since January 2025, while the S&P 500 fell 1.2% and the Nasdaq Composite Index fell 2.2%.
The renewed retaliation came after President Donald Trump threatened Iran and the Houthis with “significant military punishment” following attacks on two Saudi oil tankers in the Red Sea. The recent escalation has raised new concerns about energy flows already disrupted by reduced traffic through the Strait of Hormuz.
Oil shock revives interest rate pressure
Rising oil prices are now directly impacting interest rate expectations, creating a new source of pressure on Bitcoin.
Rising energy costs risk keeping inflation high through transportation, manufacturing, and consumer prices, limiting the Federal Reserve’s room to ease policy. The government bond market is already beginning to reflect that shift, as investors seek higher yields for holding long-term government bonds.
Traders are also increasing their bets on new Fed moves. CME FedWatch put the probability of a quarter-point rate hike at nearly 40% at its July 28-29 meeting, which it predicted would further tighten financial conditions for liquidity-sensitive assets.
Andre Dragos, head of European research at Bitwise, said a sustained rise in oil prices could push the 10-year Treasury yield above 5%.
Dragosh said the pressure could extend beyond U.S. monetary policy. Major oil importers like Japan may need to raise cash as utility costs rise, potentially creating another selling point for U.S. Treasuries.
Julian Timmer, director of global macro at Fidelity Investments, pointed to another complication. He said the correlation between bonds and stocks remains strong, so rising term premiums could weigh on both asset classes simultaneously.
That would leave investors with less room to absorb broader risk-off moves.
In the case of Bitcoin, a combination of rising oil prices, rising yields, and weak diversification across traditional markets could compound the pressure at the same time as spot demand and ETF flows start to lose momentum.
ETF trends reverse, Bitcoin demand weakens
The demand that supported Bitcoin’s recent rally is starting to lose momentum, and a tougher macro environment is coming.
The US-listed Spot Bitcoin ETF recorded net outflows of $225.2 million on July 23, ending a seven-session streak of inflows, according to SoSoValue data.
The fund raised about $1 billion during its run and remained in positive territory at about $274 million for the week ending Thursday.
While today’s outflows do not signal a broader setback for financial institutions, a reversal would remove the source of demand that had been supporting Bitcoin as pressure from rising yields and falling stocks increases.
Meanwhile, on-chain data shows a similar loss of momentum.
Ki Yong-joo, founder and CEO of CryptoQuant, said that while spot demand has weakened, futures demand remains positive but well below the levels recorded during Bitcoin’s rally three months ago.
CryptoQuant data showed that spot demand has been mostly negative or flat since June, even though Bitcoin has recovered from its early July lows. Futures traders continued to add exposure, but at a much slower pace than during the previous rally.
This divergence suggests that Bitcoin’s recovery is becoming more reliant on derivatives demand, as tighter financial conditions could make leveraged positions more susceptible to reversal.
This imbalance is adding to the pressure around $65,000, where Bitcoin is struggling to sustain the gains it made earlier this month.
Red Sea attacks threaten to prolong oil pressure
The immediate risk is that tanker attacks could turn the Red Sea into a second persistent source of disruption to global energy transport.
President Trump said Iran was responsible for further attacks by the Houthis and threatened military retaliation against both the Iranian government and the Houthis. He later said that damage to ships and cargo from future attacks could be covered by Iranian funds controlled by the United States.
The warning comes as the United States completes a 13th night of consecutive strikes against Iran, but there are few signs either side is preparing for short-term negotiations.
Energy markets are already facing a sharp decline in traffic through the Strait of Hormuz. A renewed Houthi offensive would further increase pressure around Bab el-Mandeb, a narrow strait connecting the Red Sea and the Gulf of Aden and a key route for cargo bound for the Suez Canal.
If the turmoil persists, oil prices could continue to rise even after Friday’s pullback.
JPMorgan analysts estimate that each additional month of supply constraints could add $7 to $8 a barrel to Brent oil prices. Three months of turmoil could push the benchmark’s monthly average closer to $114, he said.
Such an outcome would amplify the same pressures that pushed Bitcoin below $65,000 this week. Rising oil prices could keep inflation expectations elevated, keeping upward pressure on U.S. Treasury yields and reducing the Federal Reserve’s room for monetary easing.
Bitcoin will face such a backdrop while spot demand remains weak and ETF flows are showing early signs of losing momentum.
This makes the oil market an important short-term variable for crypto traders. De-escalation and a recovery in shipping flows could ease some of the pressure on interest rates and risk assets.
However, further attacks would increase the likelihood that the energy shock will last long enough to further tighten financial conditions.
(Tag translation) Bitcoin
