Bitcoin (BTC) has outperformed US equities and gold since the US and Israelโs attack on Iran on Feb. 28, underscoring its strength amid one of the yearโs biggest geopolitical shocks.
However, BTCโs rally may face a serious challenge if oil prices spike toward $180 per barrel, a scenario some Saudi Arabian officials now see as plausible if Middle East supply disruptions persist beyond April.
Key takeaways:
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US headline inflation may rise to 5% if oil supply shock persists, lowering rate cut odds in 2026.
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Such macro headwinds risk sending the Bitcoin price to $51,000 in the coming months.
Oil boom may double US inflation and hurt Bitcoin
As of Friday, Brent crude was trading for around $105 per barrel, up roughly 50% since the US and Israel-Iran war started.
Oil transits through Iranโs Strait of Hormuz fell to 9.71 million barrels per day by mid-March from 25.13 million in February, according to Kpler data.
Vortexa, an energy data tracker, estimates a steeper drop to 7.5 million barrels per day, highlighting the scale of the Middle East supply shock and why experts anticipate oil to rise another 70%.
A 2023 US Federal Reserve study said that every 10% rise in crude price can add about 0.35โ0.40 percentage points to US CPI.
By that measure, an extended oil rally could lift inflation by roughly 2.5โ2.8 points, enough to push CPI well above its current 2.4% level and further above the Fedโs 2% target.
Markets are already adjusting to that risk.
Policy easing expectations have shifted more hawkish, with markets no longer pricing in a second rate cut in 2026 and the odds of the first cut now pushed further to October 2027.
Higher rates tend to keep borrowing costs high, tighten liquidity, and weaken investor appetite for risk assets such as Bitcoin and stocks.
Related: Trump ups pressure for Fed chair Powell to cut rates โright nowโ
Any signs of de-escalation in the conflict could quickly cool the oil rally.
Historically, such spikes have been short-lived, with prices normalizing over time and Bitcoin regaining strength as market fears fade.
Oil shock raises Bitcoinโs odds of hitting $51,000
The $180 oil warning appears as Bitcoinโs uptrend shows signs of fatigue.
BTCโs price has dipped 9.50% from its local high of nearly $76,000, trading under $70,000 as of Thursday. Its correction has painted a bear flag pattern with a $51,000โ$52,000 measured downside target.
Bitcoinโs pullback also coincides with a complete halt in STRC-led BTC buying by Michael Saylorโs Strategy.
The firm did not buy Bitcoin this week, after purchasing 22,337 BTC in the week ending March 15 and 17,994 BTC the week before that.
That matters because Strategy had recently been absorbing supply at a pace equal to multiple weeks of global mining output. Its absence removes a major source of demand just as macro risks are building.
Coinbase premium has also turned negative, signaling softer US demand amid the ongoing oil supply shock.
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