Following renewed tensions between the U.S. and Iran in the Strait of Hormuz, international oil prices neared $100 per barrel, fueling growing concerns about a resurgence in inflation. As a result, Bitcoin and U.S. stocks both declined on Tuesday, prompting investors to reassess the Fed’s interest rate trajectory ahead of its September meeting.
Rising oil prices are pressuring risk assets.
As of Tuesday, Bitcoin was trading at $78,524, down 0.72% on the day. The S&P 500 closed at 7,689.80, falling 0.37%. The Dow Jones dropped 614.88 points, or 1.15%, while the Nasdaq showed relative resilience, declining 0.19% to 26,457.73.
The Strait of Hormuz accounts for about one-fifth of global crude oil transportation. Following escalating geopolitical tensions, upward pressure on energy prices has intensified. Rising oil prices typically increase transportation and manufacturing costs and reinforce market perceptions of persistent inflation, making the Fed’s next policy decisions even more closely watched.
August employment data boosts expectations for rate hikes.
Last Friday’s U.S. August non-farm payrolls data came in significantly stronger than expected. The data showed 162,000 new jobs added that month, well above economists’ prior forecast of 53,000, while the unemployment rate remained steady at 4.1%.
Following the release of this data, market expectations for a 25-basis-point rate hike at the Fed’s September 15–16 meeting rose to approximately 57%–59%. Stronger employment figures indicate that the U.S. economy remains resilient, dampening expectations for policy easing. For risk assets, including cryptocurrencies, rising interest rates typically compress valuation multiples.
HSBC also raised its S&P 500 year-end target to 8,100, indicating that institutions have not fully turned bearish on the medium-term outlook for U.S. equities. However, in the short term, oil prices and interest rate expectations remain the primary market drivers.
Bitcoin remains above the retracement range.
Bitcoin opened at $79,090 on Tuesday, dipped intraday to $77,603, then recovered to around $78,524. Previously, Bitcoin had rebounded from around $68,858 and reached a high of $82,281, but has recently entered a correction phase.
The report notes that the retracement range of interest is approximately between $73,986 and $75,569, and the current price remains above this zone. The Relative Strength Index (RSI), a measure of momentum, stands at 60.4, down from 66.1 a week ago, but still within the bullish range.
Additionally, traders on the prediction market Myriad currently estimate a 78.4% probability that Bitcoin will rise to $84,000 before falling to $55,000—a figure close to 77% a week ago, indicating that despite short-term pullbacks, market sentiment regarding Bitcoin’s upside potential has not significantly weakened.