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Bitcoin fell below $65,000 as surging oil prices and higher Treasury yields triggered a broader retreat from risk assets.
Data from CryptoSlate shows the largest cryptocurrency traded near $64,980 as Brent crude remained on track for a weekly gain of almost 10%. Oil settled 7% higher at $100.69 a barrel on July 23, its first close above $100 since May, before retreating to about $96.70 in European trading as of press time.
The move rippled across global markets. The 10-year US Treasury yield climbed to roughly 4.7%, its highest since January 2025, while the S&P 500 fell 1.2% and the Nasdaq Composite lost 2.2% on July 23.
The repricing followed attacks on two Saudi oil tankers in the Red Sea that prompted President Donald Trump to threaten Iran and the Houthis with “major military punishment.” The latest escalation raised fresh concerns over energy flows already disrupted by reduced traffic through the Strait of Hormuz.
Oil shock revives rate pressure
The surge in crude is now feeding directly into expectations for interest rates, adding another source of pressure on Bitcoin.
Higher energy costs risk keeping inflation elevated through transportation, manufacturing and consumer prices, limiting the Federal Reserve’s room to ease policy. Treasury markets have already begun reflecting that shift as investors demand higher yields to hold longer-dated government debt.
Traders have also increased bets on another Fed move. CME FedWatch placed the probability of a quarter-point rate increase at the July 28-29 meeting near 40%, a repricing that would further tighten financial conditions for assets sensitive to liquidity.
André Dragosch, head of research for Europe at Bitwise, said a sustained rise in oil could push the 10-year Treasury yield above 5%.
US 10-Year Yield (Source: Bitwise)Dragosch said the pressure could extend beyond U.S. monetary policy. Major oil importers such as Japan may need to raise cash as their energy bills increase, potentially creating another source of selling in US Treasuries.
Jurrien Timmer, Fidelity Investments’ director of global macro, pointed to another complication. With the correlation between bonds and equities still positive, he said rising term premiums could weigh on both asset classes at the same time.
That would leave investors with fewer places to absorb a broader risk-off move.
For Bitcoin, the combination of higher oil prices, rising yields and weaker diversification across traditional markets could amplify pressure just as spot demand and ETF flows begin to lose momentum.
Bitcoin demand weakens as ETF flows reverse
The tougher macro backdrop is arriving as the demand that supported Bitcoin’s recent rebound begins to lose momentum.
US-listed spot Bitcoin exchange-traded funds posted $225.2 million in net outflows on July 23, snapping a seven-session inflow streak, SoSoValue data showed.
US Bitcoin ETFs Flow in The Last 7 Days (Source: SoSoValue)The funds had taken in nearly $1 billion during that run and remained about $274 million in positive territory for the week through Thursday.
While one day of outflows does not mark a broader institutional retreat, the reversal removes a source of demand that had helped underpin Bitcoin as pressure from rising yields and weaker equities intensified.
Meanwhile, on-chain data point to a similar loss of momentum.
CryptoQuant founder and CEO Ki Young Ju said spot demand has weakened, while futures demand remains positive but well below the levels recorded during Bitcoin’s rebound three months earlier.
CryptoQuant data showed spot demand had been largely negative or flat since June even as Bitcoin recovered from its early-July lows. Futures traders continued to add exposure, but at a much slower pace than during the previous advance.
Bitcoin Spot and Perpetual Market Demand (Source: CryptoQuant)The divergence suggests Bitcoin’s recovery is becoming more reliant on derivatives demand at a time when tighter financial conditions could make leveraged positions more vulnerable to a reversal.
This imbalance adds to the pressure around $65,000, where Bitcoin is struggling to preserve gains made earlier this month.
Red Sea attacks threaten to prolong oil pressure
The immediate risk is that the tanker attacks could turn the Red Sea into a second sustained source of disruption for global energy shipments.
Trump said Iran would be held responsible for further Houthi attacks and threatened military retaliation against both Tehran and the group. He later said damages to ships and cargo from future attacks could be covered with Iranian funds controlled by the United States.
The warning came as the US completed a 13th consecutive night of strikes against Iran, with little indication that either side was preparing for near-term negotiations.
Energy markets are already contending with sharply reduced traffic through the Strait of Hormuz. Renewed Houthi attacks would add pressure around Bab el-Mandeb, the narrow passage connecting the Red Sea with the Gulf of Aden and a key route for shipments moving toward the Suez Canal.
A prolonged disruption could keep oil prices elevated even after Friday’s pullback.
JPMorgan analysts estimated that each additional month of constrained supply could add $7 to $8 a barrel to Brent. A three-month disruption could push the benchmark’s monthly average toward $114, they said.
Such an outcome would extend the same pressures that drove Bitcoin below $65,000 this week. Higher oil prices could keep inflation expectations elevated, sustain upward pressure on Treasury yields and reduce the Federal Reserve’s room to loosen monetary policy.
Bitcoin would face that backdrop while spot demand remains weak and ETF flows show early signs of losing momentum.
That leaves the oil market as an important near-term variable for crypto traders. A de-escalation that restores shipping flows could ease some of the pressure on rates and risk assets.
Further attacks, however, would increase the chances that the energy shock lasts long enough to tighten financial conditions further.
