Bitcoin BTC $70,405.26 has shown signs of stabilization alongside global equity markets following an early-week sell-off and a spike in oil prices, both of which were prompted by the onset of military conflict involving the U.S., Israel, and Iran. Bond markets are showing signs of caution, with rising yields indicating renewed inflation concerns and a decrease in bets on Fed rate cuts. BTC, the top cryptocurrency by market capitalization, surpassed $70,000 on Friday, marking an increase of nearly 10% for the week. On Wednesday, prices surged to almost $74,000, recovering from a dip to approximately $65,000 over the weekend, as geopolitical tensions sent shockwaves through the markets. The rebound has been reflected in equity futures. Contracts linked to the S&P 500 dipped to a multi-week low of 6,718 points on Tuesday, but have since bounced back to approximately 6,840 at the time of this report.
The first signs of a risk-off sentiment emerged as oil prices spiked after reports indicated that Iran had obstructed oil tankers navigating through the Strait of Hormuz. Markets found stability as the U.S. swiftly acted to alleviate concerns, offering naval escorts and political risk insurance for oil and gas tankers navigating through the strait. The yield on the 10-year U.S. Treasury note has experienced an upward trajectory for four straight days, increasing from 3.93% to 4.15%. Bond prices exhibit an inverse relationship with yields. In the latest developments, the two-year yield, known for its sensitivity to interest rate expectations, has surged from 3.37% to almost 3.60%. The recent uptick in yields indicates that traders are reevaluating their expectations for monetary policy, particularly as the surge in energy prices, fueled by ongoing conflicts, poses a risk of reigniting inflationary pressures. As per CME Fed funds futures, the outlook among investors has shifted, now indicating less than a 50-50 probability of two 25-basis-point Fed rate cuts this year, a significant drop from nearly 80% prior to the conflict’s emergence. “The rates market is revealing the tension in this rally,” Bryan Tan said, noting the rise in yields.
The clash between a robust economy, highlighted by the ISM Services index at 56.1 and ADP reporting an increase of 63K against an expectation of 50K, and an inflationary energy shock is a classic scenario that typically leads to the Fed remaining inactive for an extended period. “The Warsh nomination officially hitting the Senate this week adds another layer of hawkish uncertainty,” Tan added. Some analysts highlight that the inflationary effects of oil shocks usually develop slowly throughout the global economy, indicating that yields may stay high in the coming weeks and could limit the potential gains in risk assets like stocks and cryptocurrencies. Following significant geopolitical events, oil prices tend to experience a steady increase over the course of several weeks. The average pattern indicates that oil generally rises by 20–30% within approximately 60 days following the shock,” analyst Jack Prandelli stated on X. “Markets frequently undervalue the initial phase of supply risk. The actual shift typically occurs when tangible disruptions begin to manifest in the flows and inventories.
Recent robust economic indicators in the U.S. have played a significant role in the increase in yields and the reduction of rate-cut anticipations. Data released Tuesday indicated that economic activity in the U.S. services sector maintained its expansion in February, as the ISM index climbed to 56.1. The ADP private payrolls report revealed that 63,000 jobs were created in February, marking the strongest performance since July 2025. All eyes are now on the upcoming nonfarm payrolls report and the figures for wage growth set to be released this Friday. A hotter-than-anticipated print may dampen hopes for Fed rate cuts and introduce new volatility into the financial markets.