Bitcoin drops under $78K amid oil, bond and Iran risks

Bitcoin slipped below $78,000 to $77,614 on Saturday, marking its lowest level since May 1. The decline followed a week in which West Texas Intermediate crude traded above $100 per barrel, US government bond yields showed signs of strain and reports indicated Iran was moving to restrict transit through the Strait of Hormuz.

Market data recorded new intraday lows and rising volatility. Traders linked the price action to higher oil prices, tighter conditions in the US bond market and the potential for reduced shipping through the Hormuz chokepoint.

A research note from an asset manager warned that disrupted supply chains, the war’s effect on energy markets and large federal budget deficits could combine to lift inflation pressures. The note read: “The prospect for another inflation wave is lining up with similarities to the surge in price levels into mid-2022.”

Derivatives data showed open interest climbing while funding rates flipped negative on some platforms. An account on the social platform X that monitors futures flows wrote that bears were increasing short exposure, a pattern traders say can form conditions for a bear trap if long positions are forced to liquidate.

Technical traders identified roughly $75,000 as a target for new local lows after a failed retest of an ascending triangle pattern. Exchange order-book analysis pointed to around $71,000 as the next significant zone of buy orders below the market. Participants said extended price compression near $80,000 can concentrate liquidity on both sides of the book and precede a larger move.

Volatility in oil and bond markets has coincided with the crypto pullback. WTI crude finished the week above $100 per barrel, and continued concern about US borrowing costs weighed on demand for higher-risk assets, including Bitcoin.

Bitcoin had traded above $80,000 for much of May before the recent decline. Market participants remain divided on whether the current weakness is the start of a deeper correction or a short-term shakeout that could trigger a rapid rebound.