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BTC 
ETH Oil prices rose sharply next week, and Bitcoin and precious metals both pulled back
As oil prices rebounded strongly next week, Bitcoin and precious metals prices turned downward. Brent crude rose 2.75% to $107.48; West Texas Intermediate crude (WTI) rose 2.51% to $102.56. At the same time, bitcoin, gold, silver and copper prices all fell. Markets are currently waiting for Wednesday's Federal Reserve's interest rate decision.
Why are oil prices climbing again?
The main driving force behind oil price fluctuations is emerging supply concerns. Saudi Arabia last week shut down the east-west oil pipeline damaged by drone strikes in Yemen. The pipeline allows Saudi Arabia to export oil around the Strait of Hormuz. According to Reuters, the disruption of the pipeline could endanger as much as 4% of global oil supplies.
In addition, new attacks by Yemen's Houthi armed forces on Saudi Arabia and an attack on a ship in the Strait of Hormuz have exacerbated the situation. The Houthis also arrived at Palin Island in the Mandeb Strait region on Friday. This route carries approximately 4%-5% of global oil shipments.
Brent crude's weekly gain has reached 8%, allowing oil prices to exceed the US$100 mark for the first time since July. IG analyst Tony Sycamore pointed out that if the Oman mediation fails to achieve substantial results, Brent crude oil prices may move back towards the high of $119.48 set in March. Negotiations between Gulf states and Iran originally planned for Oman have been postponed.
Why are the Federal Reserve's interest rate hikes expected to heat up?
In the face of oil supply shocks, the market's expectations for the Federal Reserve are also adjusting simultaneously. Investors priced the probability of a Fed rate hike Wednesday at 86.3%, after the latest inflation data exceeded market expectations. This proportion was 59.4% a week ago, compared with only 33.9% a month ago.
Markets generally expect that the Federal Reserve may raise its policy rate by 375 to 400 basis points. The move could exacerbate concerns that the high-interest rate environment will last for longer.
The latest developments in Bitcoin and Ethereum
The rising expectations of interest rate hikes have also resonated in the cryptocurrency market. In the past 24 hours, the total market value of cryptocurrencies fell 4.32% to US$2.62 trillion. Bitcoin traded around $76,718, down 4.4% in the past week; Ethereum fell 1.79% to $2,478.43.
As a result, as oil supply concerns intensify, Bitcoin and other risky assets are facing pressure to tighten monetary policy expectations.
Why were gold and silver not spared?
Precious metals have also failed to survive market fluctuations. Gold fell 0.22% to $4,340.58; silver fell 0.25% to $64.11; and copper fell 1.08% to $6.40.
It is worth noting that gold, a safe-haven asset, also fell. Market concerns that rising oil prices may push up inflation have strengthened expectations of the Federal Reserve to adopt tighter policies, thereby suppressing precious metals that have interest-free yields.
What does the market expect on Wednesday?
Markets are counting two very different stories at the same time: on the one hand, war and supply disruptions have led to new price shocks in the oil sector; on the other hand, Bitcoin and precious metals follow the expected fluctuations of the Federal Reserve's higher interest rate policy.
This divergence may become more apparent on Wednesday. The Fed's interest rate decision will be key, and it will determine the market's response to inflation and oil shocks. In addition to the rate hike itself, Federal Reserve Chairman Kevin Warsh's speech will also be closely watched because of its decisive influence on the direction of Bitcoin, gold and other risky assets.
This content is based on general market data and does not constitute investment advice. Readers are advised to conduct their own research.
