After renewed clashes between the United States and Iran in the Strait of Hormuz, international oil prices approached $100 per barrel, and concerns about a resurgence in inflation grew in the market. Affected by this, Bitcoin and U.S. stocks weakened on Tuesday, and investors also re-evaluated the interest rate path for the Federal Reserve's September meeting.
Oil prices drive high-pressure control over risky assets
As of Tuesday, Bitcoin was trading at $78,524, down 0.72% for the day. The S&P 500 index closed at 7,689.80 points, a decrease of 0.37%. The Dow Jones Industrial Average fell by 614.88 points, or 1.15%; in contrast, the Nasdaq index managed to resist the decline, falling by 0.19% to 26,457.73 points.
The Strait of Hormuz is responsible for transporting about one-fifth of the world's crude oil. Following the escalation of geopolitical conflicts, the pressure on rising energy prices has increased. Rising oil prices typically lead to higher transportation and manufacturing costs, and they also strengthen the market's perception of inflation stickiness, which makes the Federal Reserve's upcoming decisions more closely watched.
August employment data boosts bets on interest rate hikes
The non-farm payroll data for August in the United States, released last Friday, was significantly stronger than expected. The data showed that 162,000 new jobs were created that month, far exceeding the economists' previous estimate of 53,000, while the unemployment rate remained at 4.1%.
After the release of this data, market bets on the Federal Reserve raising interest rates by 25 basis points at its meeting on September 15-16 rose to around 57% to 59%. Stronger employment performance indicates that the U.S. economy still has resilience, which also weakens market expectations for loose policies. For risky assets, including crypto assets, rising interest rates typically compress valuation space.
HSBC also raised its target for the S&P 500 at the end of the year to 8,100 points, indicating that institutions do not have a completely bearish view on the medium-term trend of U.S. stocks. However, in the short term, oil prices and interest rate expectations remain the main variables in market trading.
Bitcoin remains above the retracement range.
Bitcoin opened at $79,090 on Tuesday, fell to $77,603 at one point during the session, and then returned to around $78,524. Previously, Bitcoin had rebounded from the $68,858 level and reached a high of $82,281, and recently has entered a correction phase.
The report mentions that the range of pullbacks that the market is concerned about is roughly between $73,986 and $75,569, and the current price is still above this area. The Relative Strength Index (RSI), which measures momentum, is at 60.4, which has fallen from 66.1 a week ago, but it is still in a relatively strong range.
In addition, traders in the Myriad forecasting market currently estimate that the probability of Bitcoin rising to $84,000 first, rather than falling to $55,000 first, is 78.4%. This figure is close to 77% from a week ago, indicating that despite the short-term decline, the market's assessment of Bitcoin's subsequent upward potential has not significantly weakened.
