Bitcoin holds below $65,000 as oil spike saps risk appetite

Bitcoin traded below $65,000 on Monday as escalating tensions in the Strait of Hormuz drove oil prices higher, curbing appetite for risk assets ahead of key U.S. inflation data.

Oil futures advanced after former U.S. President Donald Trump demanded 50 years of compensation from Iran, reigniting concerns over supply disruptions in a critical shipping corridor. Brent crude briefly topped $89 per barrel, reflecting the market’s sensitivity to geopolitical risks in the region.

Cryptocurrencies and equities showed little directional movement, with investors awaiting the release of the July U.S. Consumer Price Index (CPI) report, due later in the week. Analysts noted that sustained higher energy prices could weigh on broader market sentiment, particularly in risk-sensitive assets like digital currencies.

XRP, the sixth-largest cryptocurrency by market capitalization, hovered near a critical support level around $1.00, raising speculation that a break below could trigger further declines. Technical indicators suggested limited momentum in either direction, with trading volumes subdued across major digital assets.

The standoff in the Strait of Hormuz, a vital oil transit route, has periodically disrupted energy markets this year, though direct impacts on crypto prices have historically been indirect. The latest flare-up follows reports of increased Iranian naval activity and retaliatory threats from regional powers.

Market participants will closely monitor the CPI data for signs of persistent inflation, which could influence Federal Reserve policy expectations and, by extension, risk asset valuations. Traders are pricing in a roughly 70% probability of a September rate cut, according to CME Group’s FedWatch tool, though any upside surprise in inflation could temper those odds.

For now, the interplay between geopolitical risk and macroeconomic data is keeping crypto markets in a holding pattern, with limited catalysts for a sustained breakout above or below key levels.