In 2026, oil wasn’t expected to dominate the headlines. The prevailing macroeconomic theme supporting trades betting on imminent rate cuts and increased liquidity hinged on ongoing disinflation.
Yet, on February 18th, Brent crude surged by 4.35% to $70.35 per barrel, while WTI climbed 4.59% reaching $65.19. This spike was triggered by renewed fears of a potential US-Iran conflict and stalled Russia-Ukraine peace negotiations.
This movement transcends mere oil trading—it’s a reflection of shifts in interest rates and consequently impacts Bitcoin as well.
Bitcoin doesn’t trade physical commodities like barrels of oil; instead, it reacts to changes in financial conditions. When oil prices rise due to supply disruption concerns, it exerts upward pressure on interest rates that tend to remain elevated for longer periods.
Geopolitical Risk Premium Over Demand
The price jump didn’t signal accelerating economic growth but rather an added geopolitical risk premium embedded into the market curve.
The surge intensified late in the session after Israel heightened alert levels amid signs pointing toward possible US military action against Iran. Meanwhile, Iran’s Revolutionary Guard conducted exercises that temporarily shut parts of the strategic Strait of Hormuz.
Additionally, peace talks between Russia and Ukraine held in Geneva concluded without any breakthroughs.
The US Energy Information Administration reports that approximately 20 million barrels per day—about one-fifth of global petroleum liquids consumption—pass through the Strait annually as estimated for 2024.
A full closure isn’t necessary for traders to reassess risk; even credible threats at such critical chokepoints are enough to shift pricing significantly.
Diverging Narratives: Inflation vs Hedge
An increase in oil prices does not straightforwardly translate into Bitcoin price movements; rather it creates two competing narratives:
- One suggests rising oil pushes inflation expectations higher causing yields to climb which leads risk assets including Bitcoin lower;
- The other views war-risk premiums driving demand for hedges such as gold, sometimes Bitcoin itself alongside oil;
The events on February 18th favored tightening financial conditions: gold rose about 2%, the dollar index strengthened, Treasury yields increased while Bitcoin fell roughly 2.4% closing near $66,102.
This combination points more towards restrictive monetary policy than a flight-to-safety scenario involving cryptocurrencies.
Oil Disrupts Disinflation & Tests Fed Patience
Energy shocks interfere with disinflation trends because fuel costs quickly influence transportation expenses and production inputs alike.
Research from San Francisco Federal Reserve (December 2025) indicates recent years have seen two-year Treasury yields become more sensitive to unexpected changes in oil supply compared with pre-2021 data.
This sensitivity matters deeply for Bitcoin since two-year yields serve as a proxy signaling “how soon” rate cuts might occur.
When markets interpret an uptick in crude prices driven by supply risks they question whether inflation will persist or reaccelerate.
The “cut season” trade remains fragile — persistent energy-related headline risks keeping Brent elevated push markets toward fewer anticipated cuts resulting in stronger dollar values higher real yields reduced appetite across risky assets.
Bitcoin often suffers disproportionately during these periods especially when leverage is crowded amid tightening macroeconomic conditions.
A Trio Of Possible Futures For Bitcoin
- If geopolitical tensions ease causing risk premiums embedded within crude prices fade — Brent drifts back down towards mid-$60s range (Citi forecasts $60–62). This scenario would revive hopes around disinflation continuing smoothly reopening bets on earlier rate reductions benefiting cryptocurrencies including BTC most bullish outcome here.
- If tensions linger maintaining Brent within $65–70 band central banks remain cautious delaying aggressive easing measures although crypto-specific inflows may still support some rallies but overall upside capped due “higher-for-longer” interest rate environment.
- If conflict escalates sharply (Eurasia Group estimates ~65% chance U.S strikes Iran before April end) disruptions around Hormuz could drive spikes above $80 or even near $90 per barrel pushing inflation expectations up sharply along with surging bond yields triggering intense market volatility where BTC faces conflicting pressures acting both as hedge briefly yet also vulnerable like other risky assets under severe rate shock stress.
| Scenario | Brent Price Range | &;Macro Impact (Breakevens/Two-Year/Yen)&;nbsp; |
“””'s Policy Implications | u003c/thu003eu003ctHu003e $BTC Behavior (Risk vs Hedge)&u00a0u003cTHu003eWhat To Watch Next (Key Indicators)u00a0u003c/tru003e
|---|---|---|---|
| Risk Premium Fades | Mid-$60s drift ($60-$62 Citi forecast) | (Breakevens cool down ; Two-Year yield eases ; Dollar Index softens reflecting looser financial conditions) | (Rate cuts return sooner , priced-in more aggressively )</tdn($BTC rallies acting liquidity-sensitive benefiting from “cuts soon” narrative )</TDn(Watch if Brent drops below ~$65 & Two-Year yield rolls over indicating repricing )</TDn |
Bearing On Cryptocurrency Traders’ Outlook
EIA projects average Brent price near $58 throughout next year based largely upon surplus supplies exceeding demand forecasts.
CURRENT PRICES INCORPORATE A GEOPOLITICAL PREMIUM ESTIMATED BETWEEN FOUR TO SEVEN DOLLARS PER BARREL BY ANALYSTS.
If conflict risks subside CRUDE WOULD LIKELY TRADE IN THE HIGH FIFTIES RANGE CONSISTENT WITH IEA’S PREDICTED DAILY SURPLUS OF APPROXIMATELY THREE POINT SEVEN MILLION BARRELS.
TWO-YEAR TREASURY YIELD MOVEMENTS SIGNAL MARKET EXPECTATIONS ABOUT TIMING AND MAGNITUDE OF RATE CUTS:
A RISE MEANS DELAYS OR FEWER CUTS ANTICIPATED.
IF OIL REMAINS ELEVATED PUSHING YIELDS UPWARD IT SUGGESTS TIGHTER MONETARY POLICY ENDURES LONGER THAN PREVIOUSLY EXPECTED.
BRAKE-EVENS REFLECT INFLATION EXPECTATIONS WHICH ARE TESTED WHEN OIL PRICES RISE:
IF THEY CLIMB ALONGSIDE CRUDE IT THREATENS THE DISINFLATION STORY THAT UNDERPINNED EARLIER MARKETS SENTIMENT.
A STRONGER DOLLAR INDICATES TIGHTENING FINANCIAL CONDITIONS AS OBSERVED ON FEBRUARY EIGHTEENTH WHEN THE DXY INDEX ROSE ALONG WITH GOLD AND OIL PRICES – CLASSIC SIGNS OF MACROECONOMIC RESTRICTION .
ON THAT DAY BITCOIN DECLINED WHILE GOLD ADVANCED SUGGESTING RISK-OFF SENTIMENT DOMINATED OVER HEDGE DEMAND . IF BITCOIN BEGINS TO MOVE IN TANDEM WITH GOLD WHILE BOND YIELDS STABILIZE THEN THE HEDGE NARRATIVE COULD RETURN .
(OTHER FACTORS LIKE DECENTRALIZED FINANCE DEVELOPMENTS , HALVING CYCLES , AND ETF FLOWS ALSO PLAY IMPORTANT ROLES . )
(HOWEVER , DAYS LIKE FEBRUARY EIGHTEENTH SHOW THAT BITCOIN’S PRICE ACTION IS LARGELY DRIVEN BY BROADER QUESTIONS ABOUT WHETHER OIL PRICE MOVEMENTS FORCE FEDERAL RESERVE TO MAINTAIN TIGHT POLICIES . )
(THE UNEASY REALITY IS THAT BITCOIN’S ROLE REMAINS UNCERTAIN : IT SEEKS STATUS AS DIGITAL GOLD DURING GEOPOLITICAL TURMOILS BUT TRADES MORE LIKE LEVERAGED TECHNOLOGY STOCK WHEN INTEREST RATE PRESSURES DOMINATE MARKET NARRATIVES . )
(IT CAN’T FULLY EMBRACE BOTH IDENTITIES SIMULTANEOUSLY AND SUPPLY-SIDE SHOCKS SUCH AS THESE FORCE MARKETS TO CHOOSE SIDES : CURRENTLY HIGHER OIL PRICES DRIVEN BY SUPPLY RISKS PUSH UP INFLATION FEARS CAUSING BITCOIN TO FALL ALONGSIDE OTHER RISK-ASSETS INSTEAD OF ACTING AS SAFE HAVEN LIKE GOLD DOES . )
TWO WEEKS AHEAD WILL BE CRUCIAL:
IRAN RETURNS TO GENEVA OFFERING NEW PROPOSALS,
RUSSIA-UKRAINE TALKS CONTINUE,
INDIA CLARIFIES ITS STRATEGY FOR OIL PURCHASES.
Each development influences Brent pricing curves which shape inflation outlooks impacting short-term bond yields ultimately deciding whether expectations about early monetary easing survive or falter.
Bitcoin’s trajectory follows this chain closely.…This year’s unforeseen storyline might just be how energy markets unexpectedly steer global finance.&strong>