Bitcoin weakens as oil surges back above US$100 on Iran war
The cryptocurrency is down as much as 2% after attacks on two tankers in Iraqi waters
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[SINGAPORE] Bitcoin weakened early on Thursday (Mar 12) in Asia, as oil surged back above US$100 a barrel on deepening concerns about the Iran conflict.
It fell as much as 2 per cent after two oil tankers in Iraqi waters were attacked, remaining around US$69,600 at 12.15 pm in Singapore.
Brent crude, meanwhile, soared as much as 10.5 per cent, prompting risk-off sentiment in markets, including equities.
Bitcoin has been relatively stable compared with other assets since the US and Israel initiated a bombing campaign against Iran on Feb 28.
The digital asset was among the first to fall that weekend while other markets were closed, but it rebounded quickly. In recent days, it jumped back above US$73,000 as investors sought safety in liquid assets.
Rachael Lucas, an analyst at BTC Markets, said: “We would expect some profit-taking at the US$70,000 level. The macro backdrop remains unsettled, with oil volatility and lingering geopolitical uncertainty keeping risk sentiment cautious in the short term.”
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Markets have whipsawed on mixed messaging over the Middle East conflict.
US President Donald Trump suggested on Monday that the war could end soon, but the timeline remains unclear. Iran, meanwhile, has continued to strike targets in the region and disrupt traffic through the Strait of Hormuz, a critical trade artery.
Fears about the impact of higher energy prices have sent traders flocking to the US dollar. Bitcoin has also served as a hedge, with traders looking for assets with enough liquidity to move in and out quickly, depending on market conditions.
Andreja Cobeljic, head of derivatives trading at Amina Bank, said in a note on Wednesday that conditions signalled Bitcoin could continue to see upside momentum in the near term.
He cited negative funding rates, which are payments made on perpetual futures contracts that do not expire. For Bitcoin, they hit their lowest level in nearly five weeks on Thursday.
Holders of large amounts of the cryptocurrency, known as whales, were also buying as prices dipped, he added.
“Negative average monthly funding rates have happened only 10 times since 2018, and have historically preceded strong forward returns over longer horizons,” he said.
“Whale accumulation has been observed consistently in the low US$60,000 range. In combination, the near-term set-up for a relief rally is more constructive than the headline environment would suggest.” BLOOMBERG
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