Bitcoin and Ethereum Take Hits as Oil Prices Surge Again

The oil price rose by more than 6 percent yesterday, putting pressure back on the financial markets. For Bitcoin, it was the worst day of the month, and Ethereum suffered even more. Iran and the United States remain at odds, and there is still no sign of a reopening of the Strait of Hormuz.

Since last Wednesday, Brent oil has already risen by 12 percent. That day marked a low point after it was announced that Iran and Oman were close to a deal regarding the management of the Strait of Hormuz. Today, there is still no agreement in place, and we now know that the strategic waterway, through which normally one-fifth of all global oil flows, will not be opened easily.

More expensive oil means more expensive gasoline and diesel, leading to higher transport and distribution costs, which companies will eventually pass on to consumers. As a result, the market is now fearing interest rate hikes from the U.S. Federal Reserve, which is bad news for Bitcoin among others. Safe government bonds become more attractive, and the demand for credit decreases.

Here are the three main reasons behind the new rise in oil prices:

1. Iran has stated it will keep the Strait of Hormuz closed until Washington lifts the naval blockade and sanctions, withdraws troops, makes reparations, and releases frozen assets.

2. U.S. President Donald Trump is now demanding that Iran pay compensation for victims of attacks and protests. He also claims to have 100 percent control over the Strait of Hormuz.

3. There have been reports about a transit agreement with Oman since last week, but it is still not official. Tehran also states that such an agreement does not lead to the reopening of the waterway.

On Sunday, it was also revealed that Trump wants to maintain economic pressure on Iran without escalating military violence, in order to force Tehran to the negotiating table. The absence of a new escalation is, of course, good news, but in this scenario, it could still take a long time before any breakthrough occurs.

And the longer it takes, the greater the chance that expensive energy will seep into inflation. Tomorrow will be another exciting moment when the U.S. Consumer Price Index (CPI) is announced in the afternoon.

Yesterday morning, Bitcoin was still trading for more than $65,000 but ultimately fell below $64,000. This is yet another instance of it failing to stay above $65,000, although a larger decline is currently being prevented.

The past month has seen little action in the Bitcoin price, with key levels at $67,000 on the upside and $62,000 on the downside.

At the time of writing, the Bitcoin price on the crypto exchange OKX is at $64,035. On the Dutch crypto exchange Bitvavo, the BTC price in euros amounts to €55,437. Compared to 24 hours ago, BTC is down 1.61 percent.

Bitcoin's decline has resulted in a plethora of red numbers on the altcoin market boards. Most coins have lost more value than the number one.

Ethereum is down 2.34 percent, Ripple 2.01 percent, and Solana 1.14 percent. Surprisingly, Hyperliquid has managed to rise by 2.12 percent for the day, while Cardano is the biggest loser among the top 20 with a drop of 4.89 percent.

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