Bitcoin Slides Towards $81,000 as Oil Above $110 Revives Rate-Hike Bets

Bitcoin's price on Thursday slid — erasing the gains it made earlier in the week — after oil prices jumped. The largest cryptocurrency was down by nearly 4% over a 24-hour period in New York, trading as low as $81,331 at one point.

On Wednesday, the price of the top cryptocurrency was fast closing in on $85,000 as investors piled back into tech stocks following Elon Musk's SpaceX earnings. However, conflict in the Middle East pushed the oil price higher, spurring inflation fears.

Market Reaction

A surging oil price can hurt the price of bitcoin and other "risk-on" assets because it increases the chances of the U.S. central bank raising interest rates. Bitcoin has in the past done well with low interest rates because of increased liquidity, moving at times with tech stocks and the Nasdaq.

Bitcoin has typically faced downward pressure on news of war and rallied in hopes of a ceasefire.

Political Impact

Stocks on Thursday slid on news of more attacks from the Yemeni Houthis on Saudi Arabia — stoked fears of oil supply disruptions and a wider Middle East conflict. Oil rising is stoking what many politicians are calling an affordability crisis in the U.S.

Americans will go to the polls on November 3, and surging inflation is one of the hottest topics. The Federal Reserve has said getting inflation down in the world's largest economy is its top priority.

Despite the price dip, bitcoin just had its best quarter in years, and analysts have said the coin is now in a bull market after rising above its 365-day moving average. Bitcoin last month shrugged off the Federal Reserve raising interest rates and lawmakers blocking landmark crypto legislation, the Clarity Act.