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Bitcoin slipped below $67,000 on Monday as crude oil prices surged past $100 a barrel and Friday's U.S. jobs report signaled a deteriorating labor market, leaving risk assets caught between inflation fears and recession concerns.
The largest cryptocurrency by market capitalization was trading near $67,400 as of Monday morning, down from $74,000 on Thursday. Brent crude touched $118.73 a barrel in Asian trading — its highest level since June 2022 — as the closure of the Strait of Hormuz by Iran continued to choke global oil supply.
Strait of Hormuz closure drives oil shock
Oil prices have risen nearly 40% in the past five days, after Iran tightened its grip on the strategic waterway, allowing only Chinese vessels to pass. Major Middle Eastern producers including Kuwait, Iran, and the UAE have cut production in response to the ongoing U.S.-Israel military campaign, which began March 1.
Goldman Sachs warned that if the strait remains blocked through March, oil prices could exceed the 2008 peak of $147 per barrel. The Financial Times reported that $200 oil is "no longer unthinkable."
The inflationary implications are significant: a $10 increase in oil prices sustained for three months would push U.S. headline CPI from 2.4% in January to 3.0% by May, Goldman Sachs said. JP Morgan noted that each 10% increase in oil translates to approximately 10 basis points of headline PCE inflation and a 15-20 basis point drag on GDP growth
Jobs report adds to concerns
Friday's nonfarm payrolls data compounded the risk-off mood. The U.S. economy shed 92,000 jobs in February – the largest monthly decline since October and far below the consensus estimate of +59,000. The unemployment rate rose to 4.4%, above the expected 4.3%.
Private payrolls fell by 86,000, the worst reading since December 2020. A two-month revision subtracted an additional 69,000 jobs from prior readings.
The combination of surging energy costs and weakening employment presents a difficult backdrop for the Federal Reserve, which faces potential stagflation: rising prices alongside slowing growth.
Asia markets open lower
Asian equity markets tumbled on Monday as traders returned from the weekend to price in the escalating conflict. Japan's Nikkei 225 fell 7% to 51,740 in early trading, while Hong Kong's Hang Seng Index declined 2.8% to 25,034, shedding 681 points and South Korea's KOSPI sank 7.6% to 5,161.
The surge in oil marks the largest single-day gain in nearly 40 years, according to CNBC. "Smart money" is expected to remain defensive until there is clarity on the Hormuz situation, according to analysts.
Crypto caught in the crossfire
Bitcoin's correlation with risk assets has left it vulnerable to the macro selloff. The Crypto Fear & Greed Index dropped to 14, indicating extreme fear. Ethereum fell below $2,000, while Solana declined to approximately $83.
Crypto-related equities including Strategy (MSTR), Coinbase (COIN), and MARA Holdings (MARA) traded lower in on Friday and face further pressure as markets digest the dual shocks.
