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BTC Energy markets and Bitcoin: A balancing act
Bitcoin regained its footing above $77,000 over the weekend after a sharp reversal in oil prices last Friday. Although this short-lived equilibrium has been maintained, continuing pressures in the energy sector suggest that the breathing space gained by the cryptocurrency market may be short-lived.
How will the energy market react?
Brent crude hit a high of $109.97 a barrel on Friday before falling back to a close at $104.61. West Texas Intermediate crude (WTI), known as U.S. crude, closed at $100.05 on the day. Despite a one-day price cut, Brent crude oil still rose more than 8% weekly as supply disruptions in the Middle East continued to put pressure on the energy market. Bitcoin responded positively to the decline, rising 0.9% on Friday to close around $77,200 and remained at around $77,300 on Saturday.
Mike Wirth, CEO of Chevron, pointed out: "Global crude oil inventories and emergency supply buffers used to limit previous price surges have been exhausted, making the market more vulnerable to a new round of price increases."
What are the driving forces for inflation expectations and interest rate prospects?
Oil prices exceeded the $100 mark, triggering inflation warnings in both crypto and traditional markets. Rising energy costs have a direct impact on inflation expectations and the central bank's forecast of the path of interest rates. The U.S. consumer price index (CPI) rose 0.4% month-on-month and 3.4% year-on-year in August; the producer price index (PPI) reached 5.4%. Combined with continued high oil prices, the possibility of the Federal Reserve raising interest rates next week has been pushed up to between 85% and 90%.
After the release of inflation data, both Bitcoin and gold suffered selling pressure as real yields rose. Investors tend to avoid interest-rate sensitive assets, resulting in a decline in risk appetite.
What are the signs of easing in the broader market?
The U.S. stock market also rebounded. The S & P 500 rose 0.86%, the Nasdaq Composite Index rose 0.96%, and the Dow Jones Industrial Average rose 0.98%. The slight decline in oil prices not only provided temporary relief for digital assets, but also affected the overall market's risk appetite.
However, Bitcoin's recovery from the US$76,100 level has not eliminated all risk, as its price remains below the approximately US$80,000 mark earlier this week. Meanwhile, Treasury yields hover around 5%, and capital competition among risky assets remains fierce.
The International Energy Agency (IEA) predicts that global oil supplies will be reduced by approximately 5.7 million barrels per day by 2026, driven by supply disruptions in the Gulf region and Saudi Arabia production falling to multi-decade lows. The agency has been providing data and policy support on energy security and supply-demand balance to governments around the world.
Experts pointed out: "Although the initial impact of the oil shock has weakened, as Brent crude holds above the $100 mark and the weekly line rises sharply, the crypto market only gets a brief respite rather than a clear easing."
As the weekend approaches, Bitcoin's movements are no longer determined solely by specific events in the crypto space, but are also shaped by a combination of oil prices, inflation statistics and interest rate expectations.
