Bitcoin Drops Below $65,000 as Middle East Escalation Drives Oil Surge and Fed Rate Hike Odds
Growing geopolitical friction in the Middle East and spiking energy prices triggered a broad risk-off sell-off across financial markets Thursday, driving Bitcoin below the $65,000 mark to a three-day low of $64,799 on Bitstamp.
The downturn in digital assets coincided with sharp pullbacks on Wall Street, where the tech-heavy Nasdaq dropped 2.2% and the S&P 500 fell 1.2%. Market anxiety mounted after U.S. President Donald Trump warned via Truth Social that Washington would hold Iran accountable for recent Houthi strikes targeting commercial shipping vessels off Saudi Arabia, citing previous attacks on American vessels in 2025.
The geopolitical turmoil fueled a rapid rally in energy commodities. Brent crude oil jumped above $100 per barrel, marking its highest trading level since early June.
Rising oil prices immediately reshaped expectations around U.S. inflation and monetary policy. High crude costs directly increase transportation and production expenses across the broader economy, often rekindling headline consumer price pressures. In response, benchmark U.S. 10-year Treasury yields jumped to 18-month highs, reflecting investor recalibration toward elevated interest rates for longer, as highlighted by market commentary firm The Kobeissi Letter.
According to data tracked by the CME Group FedWatch Tool, the implied probability of a 25-basis-point interest rate increase at the upcoming Federal Reserve policy meeting surged to nearly 40%. Just one week prior, markets were pricing in roughly a 12% chance of a hike. Historically, tightening monetary policy and higher risk-free bond yields make speculative assets like cryptocurrencies less attractive to institutional investors.
Within crypto markets, analysts are sharply divided on whether the latest pullback signals the end of recent upward momentum or a temporary pause before new highs.
Market commentator Exitpump suggested that the momentum seen earlier in July may be dissipating against major overhead technical resistance, recommending traders consider short positions if price action breaks decisively below the $65,000 threshold.
Conversely, trader Jelle maintained a more constructive stance, pointing out that clearing local resistance overhead could quickly open a path toward the $70,000 psychological barrier to establish a higher trading range.
Focusing on moving average indicators, analyst Michaël van de Poppe identified the 21-day moving average as a critical line in the sand for short-term sentiment, while noting key underlying support near the 21-week simple moving average at $64,073. Van de Poppe emphasized that if buyers defend these short-term dynamic moving averages, Bitcoin retains upside potential toward a $73,000 target.
