Bitcoin Price: Iran War, Fed & Institutional Interest – What’s Next?
Bitcoin held steady Wednesday as geopolitical tensions in the Middle East continued, with the cryptocurrency trading around $71,000, some 43% below its October all-time high of $126,000. Despite the ongoing conflict, Bitcoin has gained roughly 7% since hostilities began, outperforming equities, gold, and silver, according to crypto analyst Rachael Lucas of BTC Markets. The resilience comes as the broader crypto market has seen volume decline since the October wipeout. Lucas cautioned that further declines are possible, noting that a fall below $67,500 would suggest short-term weakness, with $59,000 acting as a key long-term support level. Bloomberg Intelligence Strategist Mike McGlone previously warned that Bitcoin could slump to $10,000 this year, prior to the outbreak of the current conflict. Conversely, maintaining a price above $73,000 would signal a breakout from its recent trading range. Polymarket traders currently assign a 70% probability to Bitcoin falling below $55,000 and a 77% probability of reaching $80,000 in 2026.
Iran War and Oil Prices
The escalating conflict in the Middle East is a significant factor influencing Bitcoin’s price. Paul Howard, senior director at high-frequency market maker Wincent, observed that the cryptocurrency market is absorbing volatility rather than succumbing to it, providing trading opportunities. Oil prices rose to $103 a barrel after Iran rejected claims by former President Trump of “incredibly good and productive” conversations, characterizing the assertions as an attempt to manipulate financial markets. Tehran’s Revolutionary Guards described the remarks as “worn-out psychological operations.” Analysts caution against interpreting any talk of peace negotiations at face value, given the number of Iranian leaders who have been assassinated.
Federal Reserve Policy
Lucas identified the Federal Reserve as the “single biggest drag on Bitcoin’s recovery.” While the US central bank has signaled potential interest rate cuts this year, elevated oil prices are likely to delay those cuts, as they contribute to persistent inflation. Lower interest rates typically benefit risk-on assets like cryptocurrencies. Traders have significantly adjusted their expectations for Fed policy. Weeks ago, a June interest rate cut was widely anticipated; now, there is a 13% chance the central bank will raise rates, according to the CME FedWatch tool. Adding to the uncertainty is the future of Federal Reserve Chair Jerome Powell. His term is set to expire in May, but a legal standoff between the Trump administration and the central bank has increased the risk that his successor, Kevin Warsh, a Trump nominee, will not be confirmed until after Powell’s term ends. Powell has indicated he may remain in charge if his successor’s confirmation is delayed, citing legal and historical precedent.
Institutional Investment
Despite market volatility, institutional interest in Bitcoin and blockchain technology remains strong. Since the start of the war, investors have poured almost $1.6 billion into Bitcoin exchange-traded funds, with further investment anticipated. Grayscale estimates that less than 0.5% of US advised wealth is currently allocated to crypto, indicating substantial growth potential. Traditional financial institutions are also increasingly adopting digital ledger technology. BlackRock CEO Larry Fink has repeatedly emphasized the transformative power of tokenization. Mastercard recently acquired stablecoin infrastructure startup BVNK and launched a partnership program for over 100 crypto industry players. The S&P 500 debuted on Hyperliquid, a decentralized crypto exchange that has also become a hub for off-hours oil perpetuals trading.