Bitcoin Near $77,500 as Middle East Hopes Rise, Fed Risk Looms

On May 25, bitcoin held near $77,500 after a late-night surge of 1.2%, pushing its market capitalization to about $1.55 trillion. The largest cryptocurrency reached an intraday high of $77,831, up from just above $76,500 the previous day. Price action was choppy: bitcoin fell to $76,000 late Sunday before reversing and gaining more than $2,000 by Monday midmorning. Trading consolidated around $77,000 between 8 p.m. and midnight Eastern, then climbed above $77,200 and rallied past $77,500 for the first time since Friday. The token tested the $78,000 level twice before settling near $77,500.

Oil prices moved sharply on related developments after U.S. officials said talks with Iran were close to a breakthrough. Brent crude slid from above $110 per barrel to about $96, while West Texas Intermediate dropped about 6.5% to settle near $90.33. The declines reflected a rapid unwinding of the conflict-related premium that had built into crude prices in recent weeks.

Analysts warned the diplomatic progress could be fragile after more than six weeks of volatile negotiations. Market participants have not fully returned to risk-on positioning and markets continue to price uncertainty about whether the de-escalation will hold.

Monetary policy expectations offered a counterweight to the geopolitical optimism. Bitunix analysts noted U.S. interest rate futures are beginning to reflect the possibility of a Federal Reserve rate increase as early as October, with a 25-basis-point move largely priced in before year-end. Incoming Federal Reserve Governor Christopher Waller has warned further tightening may be required if inflation expectations become unanchored. Discussions at the European Central Bank about a potential June rate move have also intensified.

Bitunix warned: “High-leverage and high-valuation assets will likely remain vulnerable to liquidity contraction pressures.” The firm added that market uncertainty has shifted from the immediate war risk to the question of how policy tools will influence financial markets over a longer horizon.

Traders and investors are watching how quickly capital might return to clear risk-on positions if diplomatic progress holds. Reduced geopolitical premium provided short-term support for bitcoin; analysts say signs of earlier-than-expected central bank tightening could put pressure on the recovery.