Bitcoin’s $65,000 rebound looks like a relief rally, but Wednesday’s Fed decision could turn it into a trap
Bitcoin climbed back above $65,000 as US-Iran tensions eased and crude oil fell, reviving risk appetite. Ethereum also rose, while the drop in Brent removed some of the recent geopolitical pressure on markets. The bigger driver now is the Federal Reserve. Last week’s oil spike sharply increased expectations for tighter policy, and markets now price about a one-in-three chance of a 25-basis-point hike at Wednesday’s meeting, versus 16% a week earlier. Most still expect rates to stay unchanged, but higher energy costs have revived inflation worries and pushed Treasury yields up. June CPI had suggested easing inflation, largely because energy prices fell, but the crude surge has clouded that picture. Bitcoin’s near-term path will depend on whether the Fed treats the energy shock as temporary or as a reason to keep tightening on the table. Thursday’s GDP and PCE data will add another macro test. Market positioning has improved, with less short-term downside hedging in options.
