Bitcoin Holds $71K Lifeline as U.S. Naval Blockade of Strait of Hormuz Sends Oil to $105

Quick overview

Before things drastically worsened, Bitcoin BTC/USD had been gaining pace, rising about 5.8% from April 6 to momentarily surpass $73,000. In direct response to the collapse of peace talks over Iran’s nuclear program, President Trump declared on Truth Social on Saturday that U.S. navy forces would blockade the Strait of Hormuz and interdict any vessel that has paid Iran a toll.

Blockade Shock: How Geopolitics Broke the BTC Rally

About one-fifth of the world’s oil commerce passes via the Strait of Hormuz. Brent crude saw its biggest single-session increase since Russia’s invasion of Ukraine in 2022, rising 9.5% to $105 per barrel in just 30 minutes after U.S. futures markets opened on Sunday. Together, Bitcoin fell to a session low of $70,623, momentarily endangering a crucial support area before leveling out above $71,000, where it is currently trading down 0.62% for the day at $71,221.

Short-term traders are viewing Bitcoin as a risky asset despite its long-term reputation as a macro hedge. The blockade is a real supply shock to the world’s energy markets, stoking concerns about stagflation and reducing demand for speculative assets in general.

BTC/USD Technical Picture: $70,000 Is the Line in the Sand

The fact that Bitcoin is still trading below its 200-day exponential moving average indicates a bearish structural signal. According to Coin Bureau analyst Nic Puckrin, the key near-term support is $70,000, while the immediate resistance band is between $73,000 and $74,000. It would be beneficial to have a weekly closing over $71,000 since it might start a crawl toward that resistance band.

The next significant floor below $70,000 is approximately $67,000, which is close to the March panic bottom. If international news continues to worsen, this level may be tested soon. Low-conviction dips and rebounds are typical in this type of news-driven environment, therefore volume confirmation on any directional move will be crucial.

Rate Cut Hopes Evaporate as Macro Headwinds Mount

Expectations of a short-term Federal Reserve rate drop have been effectively abandoned due to the inflationary effects of the Hormuz blockade. There is a greater than 98% chance that the FOMC will maintain rates at its meetings on April 29 and June 17, according to CME FedWatch. The July 29 meeting is currently the earliest feasible window for a 25-basis-point drop, and even then, the likelihood is at 33.6%. If inflation stays above the 2% objective, FOMC members have not ruled out raising interest rates, which would be extremely detrimental to riskier assets like Bitcoin.

ETF flows continue to be net positive week over week, somewhat countering this pressure and indicating that institutional accumulation is still going on under the surface even as retail sentiment declines.

Regulatory Wildcard: The SEC’s CLARITY Act Roundtable

The SEC will have a roundtable on the CLARITY Act on April 16. This could be a spark that is completely unrelated to the Middle East crisis. In a market that might otherwise be dominated by macro concern, positive regulatory signals could offer a floor and introduce new hope. As a possible short-term re-rating catalyst for the larger cryptocurrency market, traders should keep a close eye on this development.

Bitcoin Price Prediction: Three Scenarios to Model

A ceasefire that ends the geopolitical overhang, oil sliding down below $80 per barrel, and softer-than-expected economic statistics to allay fears of stagflation are all necessary for a prolonged recovery, according to Puckrin’s clear framework. Today, none of those circumstances exist.

BTC grinds sideways in the $70,000–$74,000 region for the majority of Q2 in the base case, which is a stalemate with no further escalation. The bull case aims at $90,000 and requires all three of the aforementioned parameters. A breach below $70,000 initiates the bear case, which aims to reach the March low around $67,000. If sentiment dramatically declines, momentum may continue.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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