Bitcoin hits $78k as oil spikes to $102 amid Strait of Hormuz shipping crisis

Oil Prices Surge Amid Strait of Hormuz Shipping Crisis

On April 21, Brent crude oil prices rose 5.4% to close at $99.89, with an intraday peak of $102.16. The surge was driven by severely impaired shipping through the Strait of Hormuz, where only three ships transited in the prior 24 hours—down from approximately 140 daily before the conflict began.

International Energy Agency (IEA) Executive Director Fatih Birol described the situation as the largest energy crisis in history. In response, the IEA coordinated a record release of 400 million barrels from strategic reserves in March to stabilize markets.

Energy Shock Ripples Through Financial Markets

The oil shock is already impacting consumer prices and financial conditions. In March, US retail sales exceeded expectations, driven largely by a 15.5% surge in gasoline station receipts, directly tied to war-driven fuel price increases. This reinforces the inflationary pressures already priced into the rates market.

Bitcoin Rises to $78k as Fed Rate Cut Expectations Fade

Bitcoin’s price movement is increasingly tied to oil market dynamics. As energy costs remain elevated, inflation risks persist, and the Federal Reserve delays rate cuts, Bitcoin has climbed to $78,000.

In late February, Fed funds futures had priced in two quarter-point rate cuts by December. By April 21, those expectations had collapsed to only a 30% chance of a single 25-basis-point cut for the entire year. This repricing reflects the war’s impact on energy-driven inflation.

On the same day, the 10-year Treasury yield reached 4.313%, while the 2-year Treasury yield climbed to 3.802%—both higher on the session.

Key Market Movements on April 21:

• Brent crude: Closed at $99.89, touched $102.16 intraday
• Fed rate cut expectations: Dropped from two cuts by December to a 30% chance of one 25-bp cut for 2024
• 10-year Treasury yield: 4.313%
• 2-year Treasury yield: 3.802%
• Dollar strength: Increased on the session

Gold and Bitcoin React to Higher Real Yields

Even traditional inflation hedges like gold came under pressure, dropping 2% as higher real financing conditions and dollar strength outweighed typical safe-haven demand.

Deutsche Bank highlighted the downside risks in an April 17 note, warning that the Fed may hold rates unchanged through 2026 due to oil-driven inflation.

Ceasefire Hopes Briefly Eased Pressure

On April 7, a potential ceasefire development briefly pushed Brent crude down to $92.55. The next day, Treasury yields fell, traders rebuilt 50% odds of a Fed cut by year-end, and Bitcoin surged 2.95% to $72,738.16. This sequence confirmed the transmission channel: softer oil eases inflation and rate hikes, which in turn supports Bitcoin.

Macro Variables Driving Bitcoin’s Outlook