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Bitcoin Approaches $73K Amid Recession Risks and Weak Dollar
Key Points:
- Bitcoin rose to $72K as markets price in rising recession risks and a weaker dollar.
- Meanwhile, oil is rising and tensions with Iran remain high. If pressure increases, the recent $BTC rally could quickly fade.
- On Thursday, $BTC once again held above $72,000 despite weak U.S. economic data and rising inflation.
WTI Crude Oil jumped to $97 after Iran accused the U.S. and Israel of violating the ceasefire. This added nervousness to the market. If tensions continue to escalate, $BTC could fall below $68,000.
S&P 500 futures and WTI oil. Source: TradingView
The relationship between oil and risk assets has re-emerged. After Donald Trump announced a ceasefire, markets surged: S&P 500 futures hit a 30-day high, while WTI dropped below $100.
Now sentiment has shifted. Market participants doubt that the ceasefire between the U.S. and Iran will hold for long.
If the conflict escalates again, markets will react quickly. In such a scenario, Bitcoin could also decline.
Fragile Iran Ceasefire and Weak U.S. Data Limit Bitcoin Upside
Iranian parliament speaker and former IRGC general Mohammad Bagher Ghalibaf stated that Israeli actions are hindering ceasefire negotiations. He cited operations in Lebanon against Hezbollah, drone flights over Iran, and uranium enrichment restrictions. This was reported by Yahoo Finance.
U.S. data, however, provided some support. Core PCE rose by 0.4% month-over-month in February.
At the same time, the economy appears weaker. U.S. GDP growth for Q4 was revised down to 0.5% annualized, increasing recession concerns.
U.S. Dollar Index and $BTC/USD pair. Source: TradingView
Markets are currently pricing in a simpler scenario: if the economy slows, U.S. authorities may reintroduce liquidity measures to support markets.
As a result, investors are less risk-averse. Even with persistent inflation, capital may continue flowing into markets.
Additionally, confidence in the Federal Reserve System to manage a recession without fueling inflation is declining. This has weakened the dollar against a basket of currencies.
AI and Private Credit Risks Not Yet Pressuring Markets
The correlation between Bitcoin and U.S. equities remains unstable, but during periods of declining real yields, investors increasingly seek alternative assets. While Bitcoin is not considered a reliable hedge against fiat debasement, a weaker dollar still supports demand for scarce assets.
30-day correlation between $BTC/USD and S&P 500. Source: TradingView
On Thursday, the S&P 500 was just 2% below its all-time high. Investors appear unconcerned about issues in private credit or rising costs among AI companies.
In essence, Bitcoin is currently reacting more to expectations around the Iran conflict than to weak U.S. macroeconomic data.
At present, recession risks are favoring scarce assets. Therefore, there are no clear signs that inflation or labor market conditions could trigger a major sell-off.
See also: "Bitcoin Reaches $73,000 Amid Easing Geopolitical Tensions"
