Escalating conflict in the Iran region is fueling household inflation expectations, potentially delaying Federal Reserve interest rate cuts and tightening the liquidity environment for risk assets, including Bitcoin. Currently, Bitcoin is trading around $69,434 amid extreme market fear.
According to a Financial Times report on March 12, the oil price shock caused by the conflict is gradually impacting consumer expectations. Survey data shows that households now expect prices to rise faster in the coming year.
Oil Prices Break $100, Gasoline Prices Surge 20%
Economist Swonk said, "As we saw after the outbreak of the pandemic, these changes could trigger longer-lasting inflation."
Fed Rate Cut Outlook Faces More Uncertainty
Northlight Asset Management Chief Investment Officer Chris Zaccarelli said, "The Fed will now have to stand pat for longer, and they need to see if inflation expectations are going to rise and become entrenched."
Bitcoin Holds $69,000 Amid Extreme Fear
Data shows that Bitcoin spot ETFs experienced net outflows of $3.8 billion in February, the worst month since their launch in January 2024.
Analysts Divided on Bitcoin's War Outlook
Wintermute OTC Head of Trading Jake Ostrovskis said, "Oil price movements have more impact on cryptocurrencies than geopolitics itself." Higher energy prices exacerbate inflation expectations, which in turn delays rate cuts and tightens the liquidity that drives up the prices of risk assets.