Bitcoin fell nearly 1% as renewed military tensions between the U.S. and Iran drove crude prices higher, putting additional pressure on risk assets.
The cryptocurrency was trading lower after a weekend escalation in the conflict pushed oil markets into positive territory.
On Saturday, U.S. Central Command (Centcom) said American forces had struck three Iranian oil tankers: M/T Downy near Kharg Island, M/T Stark 1 near Jask and M/T Kylo in the Gulf of Oman.
Admiral Brad Cooper defended the action, saying, “If you shoot at two of our ships, we will impose an even higher economic cost — taking out three of yours.”
Centcom also provided an update on the U.S. maritime blockade of Iran. Since operations restarted on July 14, American forces have redirected 92 merchant vessels, disabled three and boarded two, indicating that enforcement activity in the region is becoming increasingly aggressive.
Oil prices rose about 1% in both U.S. and European markets, with West Texas Intermediate crude trading at $92.72 a barrel.
WTI has climbed more than 6% during the first week of September, recovering significantly from its early July low near $70. A prolonged increase in energy costs could fuel inflation globally, potentially limiting the ability of central banks such as the Federal Reserve to reduce interest rates.
That dynamic could weigh on markets that have benefited from plentiful fiat liquidity, including cryptocurrency.
Bitcoin, the largest cryptocurrency by market value, was changing hands around $79,700 at the time of writing, down nearly 1% from midnight UTC, according to CoinDesk.
BTC repeatedly moved around the $80,000 mark throughout the weekend. Meanwhile, the Liquid Network, a settlement infrastructure used by crypto exchanges, suffered an exploit late Sunday involving roughly $320 million.
Rate Expectations Add to Market Uncertainty
Federal Reserve rate-hike expectations increased Friday after U.S. employment data showed stronger-than-expected job growth in August.
President Donald Trump quickly renewed his demands for lower interest rates, putting additional pressure on the central bank.
“The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change,” Trump said in a Truth Social post Friday. He added that “A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT… Very simple!”
Trump subsequently called for the U.S. to maintain the world’s lowest interest rate and warned that he could halt trade with countries where the U.S. records a deficit.
The conflicting signals leave Fed Chair Warsh navigating between political demands for easier monetary policy and economic data pointing to a relatively resilient labor market.
For Bitcoin, that uncertainty may be more significant than the prospect of a rate increase itself.
With crude prices climbing and investors reassessing the Federal Reserve’s policy path, the combination could weaken risk appetite and limit upside for Bitcoin and other liquidity-sensitive assets.
