Wintermute: Oil stabilizing at $100 may spark BTC rally

Wintermute tracked the potential connection between BTC and oil prices. According to the market maker, BTC may return to a higher range if oil establishes a $100 price moat. 

Wintermute paid special attention to the effect of oil risk premiums on the crypto markets. The strike pause against Iran lowered the short-term risk, helping BTC recover the $70,000 range. 

BTC traded at $71,104.40, with a forecasted rise to $74K-$76K, according to Wintermute. This range may come in the best-case scenario when traffic through the Strait of Hormuz normalizes.

In the case of further disruptions, BTC may return to $65,000. 

BTC also lived through a brief reaction to a hawkish Fed, with no interest rate cuts predicted until the end of 2026. This left oil prices as the one significant factor for oil performance. 

Will oil drive BTC pricing? 

The connection between oil prices and BTC is chaotic, going through multiple stages. The post-pandemic oil slide coincided with a BTC bull market, but there may be more complex short-term relationships. 

Wintermute advises on watching the talks between Iran and the US for signs of additional oil risk premiums and inflation. In this case, BTC may dip to a lower range. 

In the case of de-escalation, BTC has a path to move into the $80,000 range if institutions and whales move in to buy the dip.

Based on Wintermute’s performance data, BTC was down by 6.8% for the week ended March 22. Gold dipped even lower, erasing 10.3%. ETH and altcoins also reacted to the news of an oil supply shock, ending the week in the red. 

As of March 24, the Bitcoin fear and greed index crashed again to 11 points or ‘extreme fear’. The Ethereum fear and greed index reached 32 points, indicating fear. Altcoins as a whole remain stagnant, and oil was the only market with a strong directional move. 

Crypto bear markets coincide with high oil prices

During the 2022 bear market, crypto traded under conditions with relatively high oil prices. During the previous bear market, the main factors for crypto were internal, as the market reeled from the crash of FTX. 

This time, the crypto space has not seen any significant internal problems, but it remains open to geopolitical risk.

BTC has also decoupled from the S&P 500 as investors turned to lower-risk assets. BTC also shifted its trading style, becoming an asset to react quickly to uncertainty, due to its trader base and active trading over the weekends. 

BTC still shows it has enough support to add a net 6% to its price in March. Despite this, in Q1 to date, the leading coin is down by 18%, and has not recovered previous levels due to escalating global uncertainty.