Rising oil and gold prices are casting a shadow of uncertainty on the Bitcoin (BTC) market, which is currently trading around $87,600.
Rising oil prices could act as an inflation catalyst, forcing the US Federal Reserve (FED) to maintain restrictive policies. Limiting the liquidity needed for Bitcoin to recover maximum levels.
Financial Institutions President Jerome Powell yesterday affirmed that economic growth remains strong and said the Fed will continue to evaluate future interest rate decisions on a meeting-by-meeting basis and remain reliant on economic data.
Pressures on cost of living and monetary policy
Rising oil prices have a direct impact on the global cost structure. The price per barrel of West Texas Intermediate (WTI) crude oil, which serves as a reference for U.S. energy prices, is: It rose 12% this month to $64.. Brent, the European and international standard, also rose by up to $70.
This dynamic changes the bullish expectations for Bitcoin. Increased fuel generally increases logistics costs. Affects prices of basic consumer goods and electronics.
Higher energy prices represent an indirect tax on consumers. As the current economic situation shows, this phenomenon forces employees to demand higher salaries to compensate for the rising cost of living, ultimately reinforcing the spiral in which companies regularly revise prices upward.
In this scenario, central banks become less flexible. Financial institutions typically respond to rising inflation by increasing the cost of money and tightening credit conditions. Just yesterday, the US Federal Reserve decided to keep interest rates stable, as expected, after cutting them three times in a row since last year.
Geopolitics and oil supply
Geopolitical factors increase the volatility of the energy market and, by extension, Bitcoin. Tensions between the US and Iran Oil prices rose on concerns about supply disruptions.
US President Donald Trump said Iran could soon organize a “swift and violent” attack if it did not agree to a series of demands it has made to the country’s leaders. President Trump compared the situation to the troops gathered near Venezuela late last year, which ended in early January with a bombing raid on South America.
However, Venezuela has emerged as a key factor in easing price pressures. Last Sunday, multinational company Trafigura made the first shipment to go directly to the United States as part of a 50 million barrel supply agreement signed this month between Caracas and Washington.
Additionally, the United States is expected to soon issue a general authorization to lift some sanctions on Venezuela’s energy sector.
Discrepancy between Bitcoin and Gold
Despite the fact that Bitcoin reached an all-time high of $126,000 in early October last year, as reported by CriptoNoticias. That performance stands in contrast to the price record for gold, which currently trades at $5,500.
Market analyst and professional trader Willy Wu believes: Current gold demand corresponds to decisions that have not yet been applied to Bitcoin. The trader emphasized that it is very difficult to convince governments and fiduciary institutions to buy an emerging asset like BTC, which has a 17-year history.
While oil and metals capture the attention of most inflation-conservative capital, Bitcoin needs to demonstrate its technical resilience and ability to serve as a haven in a high-interest rate environment.