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Bitcoin falls below $66,000 as oil shock fuels inflation and kills rate-cut hopes
Bitcoin dropped below $66,000 on March 27, joining a broader decline in risk assets amid rising concerns over U.S. inflation and an ongoing oil shock caused by the closure of the Strait of Hormuz.
1-week $BTC/USD chart and 200 EMA. Source: Bitstamp
Compared to the local peak on March 17, the asset’s price declined by 13% to $65,505, according to Bitstamp. March now risks becoming the sixth consecutive negative month — something not seen since the 2018 bear market.
Bitcoin monthly returns. Source: CoinGlass
Oil, bonds, and the Fed at a deadlock
The main catalyst behind the correction was macroeconomics: U.S. stock markets opened lower amid escalating concerns over global oil supply — the Strait of Hormuz, through which about 25% of global seaborne oil passes, remains closed, while the conflict with Iran continues.
The U.S. Treasury market reacted with a sharp rise in yields: 10-year bonds reached their highest levels since the start of the conflict. The analytical platform The Kobeissi Letter reported on X that the U.S. bond market is under significant stress.
The authors noted that in less than a month, market expectations shifted from rate cuts by the Federal Reserve to discussions of potential rate hikes — with the base case now implying a pause for the next 18 months.
According to CME’s FedWatch tool, markets are repricing monetary policy expectations in real time. Adam Kobeissi, founder of The Kobeissi Letter, stated that inflation expectations have reached levels where the market is effectively pricing in an emergency rate hike.
This creates a contradiction: the Federal Reserve had been cutting rates due to a weak labor market — which remains weak. However, inflationary pressure from high energy prices now outweighs this factor, forming what analysts describe as an “inherently unstable” setup.
$70,000 becomes resistance for Bitcoin
Market sentiment reflects this. Bitcoin dropped to a three-week low, and $70,000 has flipped from support into resistance.
According to trader Technical Crypto Analyst, bitcoin broke its ascending trendline and is forming lower highs below the $70,000–72,000 supply zone — confirming short-term seller dominance. After losing $68,000 support, a move toward the $64,000–65,000 demand zone appears likely, while only a strong reclaim above $70,000 would invalidate the bearish momentum.
4-hour $BTC/USD chart. Analysis: Technical Crypto Analyst
Trader Daan Crypto Trades points to last week’s low around $65,600 as a key level. According to him, the market continues to de-risk ahead of weekends — a pattern that has repeated for several weeks.
4-hour $BTC/USD chart. Analysis: Daan Crypto Trades
The geopolitical and macroeconomic backdrop remains decisive: the closed Strait of Hormuz, oil-driven inflation, and shifting expectations for Federal Reserve policy create an environment where Bitcoin moves in sync with risk assets. The monthly close on Sunday will determine how strong the current demand zone near $65,000–66,000 is.
AI perspective
From a data-driven perspective, the current macro setup resembles a classic stagflation trap: rising energy prices drive inflation while the labor market remains weak. This puts the Federal Reserve in a no-win situation — raise rates and harm the economy, or hold them and allow inflation to persist.
For Bitcoin, this creates dual pressure: as a risk asset it suffers from tightening policy, while as a hedge it has yet to attract consistent inflows in an oil-driven inflation environment. Analysts have been noting this “identity crisis” for weeks.
The open question remains: can Bitcoin find a new role in a stagflation scenario — or will it continue to act as a proxy for broader market sentiment?
See also: "Chainlink Price Prediction: Will Coinbase Integration Finally Push LINK Above $10?"
