Bitcoin rebounded strongly during early U.S. trading on Wednesday, climbing back toward the $71,000 level after dipping to around $69,000 earlier in the session. The recovery coincided with a sharp reversal in oil prices, which helped lift sentiment across risk assets.
The world’s largest cryptocurrency, Bitcoin, quickly bounced from the $69,000 range to approach $71,000 during the U.S. morning hours.
Other major digital assets moved higher alongside bitcoin. Ethereum, Solana and XRP all posted similar intraday gains as the broader crypto market strengthened.
The rally appeared to follow a rapid pullback in oil prices. Crude had been climbing earlier in the session before suddenly dropping roughly $3 per barrel within minutes. At the time of writing, April futures for West Texas Intermediate crude oil were trading near $85, still about 2% higher on the day.
The decline in crude prices also supported equities. The tech-heavy Nasdaq Composite shifted from a modest loss to a gain of roughly 0.5% in early U.S. trading.
Crypto-related stocks showed mixed performance. Shares of Strategy, Galaxy Digital and Bullish recorded slight gains, while Coinbase and eToro edged lower.
Throughout the week, risk markets have been heavily influenced by movements in oil prices amid the ongoing conflict involving Iran. Over the weekend, stocks and cryptocurrencies dropped sharply after crude briefly surged toward $120 per barrel, only to recover once oil prices pulled back.
Inflation data meets expectations
New U.S. inflation data released Wednesday came largely in line with economists’ forecasts. The February Consumer Price Index increased 0.3% compared with the previous month, bringing the annual inflation rate to approximately 2.4%.
However, next month’s inflation figures could look quite different as the geopolitical conflict involving Iran may push energy prices higher, potentially influencing future readings.
This raises questions about how the Federal Reserve will respond if inflation begins to rise again. Policymakers will have to decide whether to treat the increase as a temporary energy-driven shock or adopt a more hawkish stance after previously underestimating inflation during the last cycle.
Stephen Coltman said the central bank’s approach will be closely watched by investors, particularly at next week’s Federal Reserve meeting, where officials may provide clues about their policy outlook.
Regarding bitcoin, Coltman suggested that a potential rise in inflation next month may already be priced into the market.
