The market expected that signals from the Fed about its readiness to ease policy would trigger a bitcoin rally, but reality turned out to be more complicated. BTC continues to decline, and the main culprit is oil, which is steadily approaching the $90 per barrel mark, reshaping the balance of power in the risk asset market.
Bitcoin's anomalous reaction
Over the past week, the macroeconomic backdrop has noticeably softened. The probability of a rate hike in September has plummeted from 52% to 30%, the yield on two-year U.S. Treasury notes has dropped from 4.24% to 4.17%, and the dollar index has fallen to 99.5. All three indicators are a classic "green light" for cryptocurrencies, which typically surge on such data.
Instead, bitcoin has slipped from $65,000 to $63,500. This dynamic looks anomalously weak against such a pronounced shift in expectations. The logical explanation is that geopolitical risks and the oil factor outweigh the positive from monetary easing, creating a powerful headwind for digital assets.
The oil threat
The key signal I am currently watching is Brent approaching the psychological level of $90. History shows that what is dangerous is not a short-term spike above this mark, but a sustained hold there. If oil lingers at such levels, inflation expectations will begin to rise, and along with them, bond yields, which automatically hits all risk assets, including crypto.
For now, five-year breakeven inflation expectations remain stable—around 2.24%. But if oil breaks through $90 and heads toward $100, the market's "dovish" expectations regarding the Fed will become extremely vulnerable. In that case, the regulator's softening rhetoric would simply lose its meaning for investors.
Two scenarios for BTC
For bitcoin's short-term dynamics, I see two paths. The first: oil declines, yields and the dollar continue to weaken—then BTC will get a chance to catch up amid improved liquidity. The second: oil stays expensive, inflation expectations accelerate—and then both bitcoin and Ethereum will continue to face pressure, despite all the Fed's friendliness.
My conclusion: the cryptocurrency market is currently a hostage of the commodity market, not monetary policy. Keep an eye on Brent—this indicator is now more important than Fed meetings.