ETFs

Monday began with an unpleasant milestone for Bitcoin. The leading cryptocurrency broke below the seventy-seven-thousand-dollar level and continued sliding lower, trading around $76,946. A one-and-a-half percent daily loss is not particularly dramatic for an asset accustomed to swinging five to ten percent in a single session. But more important than the percentage itself is the fact that this marked Bitcoin’s lowest level since May 1. Nearly three weeks of gains and consolidation were erased in just a few trading sessions.

Just last week, Bitcoin looked promising. It briefly climbed above the eighty-thousand-dollar mark, and bulls had already begun speculating about when the next major psychological level would fall. But the breakout turned out to be false, and the market failed to hold the higher ground. Looking back now, it’s becoming clear that the move above eighty thousand was not the beginning of a new rally, but rather a final burst before a prolonged correction. The crypto market, which only recently was fueled by hopes of imminent monetary easing, has collided with a harsh reality where oil prices are rising, bond yields are climbing, and risk assets are getting crushed.

The main trigger behind today’s Bitcoin decline lies far outside the crypto world — in the Middle East and the bond market. On Monday, Brent crude oil surged above $110 per barrel, setting off a chain reaction that rippled across the entire financial universe.

Expensive oil means inflation. Inflation means higher interest rates. Higher rates are deadly for risk assets — and Bitcoin, whether people like it or not, still belongs in that category. Investors are looking at oil prices, headlines about drones over the UAE, and failed diplomatic negotiations with Iran, and drawing a simple conclusion: cheap energy is not coming back anytime...