Why is Crypto Crashing? Oil prices jump and that puts fresh pressure on Bitcoin

Ben Graham · 8 horas atrás

Bitcoin is a commodity in the eyes of the SEC and the CFTC. Well, technically, rising oil prices should push the Bitcoin price higher. However, this logic seems not to be holding up at spot rates.

From what’s evident, crypto is crashing, and the Bitcoin price is under immense selling pressure. The digital gold is still capped below $90,000, and bears seem to be unyielding. Overall, the general expectation among traders is that the downtrend of Q4 2025 is over, and prices will soon break higher.

Time matters. Before then, however, eyes are shifting to oil prices. At the moment, oil prices are climbing fast, and that shift just added another headwind for Bitcoin. West Texas Intermediate (WTI) crude jumped nearly +12% this month to $64, while Bitcoin slid below $90,000 after peaking near $126,000 in October.

The backdrop is scary: markets are already nervous about inflation and stubbornly high interest rates. If oil prices rise further, closing the week strongly, it is likely that high energy prices will end up squeezing risk assets like crypto.

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Why is Crypto Crashing? Oil Prices Matter

Oil sits inside almost everything you buy. When crude gets more expensive, gasoline prices rise, shipping costs jump, and companies pay more to move goods. Those costs land on you at checkout. Simply put, that’s inflation. Prices rise, workers ask for higher wages, and businesses raise prices again to cover payroll. The cycle feeds itself.

The Fed watches this closely. The Fed says higher energy prices push inflation both directly and through second-round effects like wages and food. That matters because inflation keeps interest rates high.

When WTI crude climbs, as it did by reaching the $64 mark this month, it signals rising energy costs. When inflation looks sticky due to high energy prices, the central bank is less likely to cut interest rates.

BoA on CTAs in #WTI: Crude oil futures rose for a fifth straight week, prompting trend followers to continue covering shorts, with more buying expected next week; the fastest systems could even flip long.#oott pic.twitter.com/BSJ3jfihS2

— Neil Sethi (@neilksethi) January 25, 2026

From a crypto perspective, this is bad news. Bitcoin often thrives on “cheap money” or in a low-interest-rate environment. Therefore, when rates stay high, investors tend to pull back from risk-on assets like crypto and move into safer yields like treasuries or commodities such as oil.

Things could get worse in the coming few weeks or months. Escalating tensions with Iran is bad news. The US recently deployed an aircraft carrier strike group to the Middle East following a “maximum pressure” campaign and crackdown on Iranian nuclear activities. If relations sour, traders expect a “worst-case scenario” involving the Strait of Hormuz, where 20% of the world’s oil passes daily.

Rising oil prices translate to higher inflation, and the Fed will be hesitant to slash rates. Yesterday, Jerome Powell said inflation is dropping but “the job is not yet done.” In the current state of economic fog, the chair of the Fed said inflation is being driven by “goods” not energy prices. As long as Donald Trump threatens other economies with tariffs, inflation will rise in the US.

Stanley Druckenmiller said what many think about Jerome Powell but won’t say out loud.

“The Fed’s job is to avoid big mistakes — like the massive inflation we just had. Powell is obsessed with engineering a soft landing and protecting his legacy. But the only reason we even need… pic.twitter.com/UfCsbhZvx0

— Daniel (@danielisdizzy) January 28, 2026

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What’s Next For Bitcoin?

Bitcoin struggles when money gets expensive. High interest rates pull cash toward savings accounts and bonds. Risk assets lose their shine. This trend was evident throughout 2022 when Bitcoin and some of the best cryptos to buy crashed to record lows. At that time, the Fed raised rates aggressively to fight inflation, and Bitcoin fell by over 60%. That history still shapes how traders react today.

This is why the recent gold and silver rallies have hurt crypto sentiment. Now oil adds fuel to the same fire, accelerating the end of a dovish regime. If energy keeps climbing, the Fed has little reason to rush toward cheaper money. That delays the liquidity boost Bitcoin bulls want.

Gold is doing what it always does first:
front-run stress, fear, and capital preservation.

Bitcoin is doing what it usually does early in a crack:
getting sold as liquidity tightens and risk is reduced.

That divergence is the signal.

When confidence breaks:

Capital runs to… pic.twitter.com/kJ5ffR4XvZ

— AA (@AAStack) January 26, 2026

The good news is that Bitcoin still trades as a long-term hedge for many investors. Over time, limited supply matters more than monthly inflation data. Moreover, if the greenback starts to weaken because the Fed cannot raise rates further without breaking the economy, Bitcoin may catch the “anti-fiat” bid.

What’s needed now is for Bitcoin prices to stabilize, even if gold rallies. Any rejection of lower prices, crucially below $85,000, will be enough to prove to institutions that the digital gold belongs in the same “hard asset” bucket as the yellow metal.

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