As cryptocurrency prices face corrections, an unexpected factor could boost them: decreasing crude oil prices. This energy variable might become the next driving force in the French crypto market.
While Bitcoin continues standing above $100,000, Brent crude oil prices have fallen for the second consecutive day, reaching $63 per barrel, with West Texas Intermediate (WTI) sliding to $60.20 — the lowest since early May. These levels represent a drop of over 25% from their yearly highs.
This decline is partly explained by signals from the Trump administration regarding potentially successful indirect negotiations with Iran on its nuclear program. A potential agreement would mean a partial lifting of sanctions against Tehran and, more importantly, an increase in Iranian oil exports to an already oversupplied market.
Why does this impact cryptocurrencies? Because cheaper oil results in lower fuel costs, which mechanically lowers overall inflation. Such a reduction in inflationary pressures would then give the US Federal Reserve (Fed) more room to lower interest rates, historically a favourable environment for digital assets.
“This deceleration gives the Fed a window to consider rate cuts as early as the summer,” says Kathy Bostjancic, Chief Economist at Nationwide.
Indeed, Bitcoin and most altcoins experienced a surge in 2020 and 2021 when the Fed drastically cut rates. Cryptocurrencies, generally seen as high-risk assets, benefit from an accommodative monetary environment.
According to recent macroeconomic data, the overall Consumer Price Index (CPI) in the United States decreased from 2.4% in March to 2.3% in April, while core inflation (excluding energy and food) remains steady at 2.8%.
A continuation of this trend will give the Fed a real “green light” to initiate rate cuts, enhancing the attractiveness of cryptocurrencies.
Another macroeconomic lever favourable to the crypto market is the recent trade truce between the US and China. Both giants significantly reduced their tariffs, dropping from 145% to 30% for US taxes and from 125% to 10% for Chinese taxes.
The recent US-China trade truce, reducing tariffs from 145% to 30% on the US side and from 125% to 10% on the Chinese side, eases global recession fears.
This climate boosts stock markets, reaching new highs, and benefits cryptos through correlation. “Since 2020, Bitcoin often follows stock market indices in risk-on phases,” notes Marcin Kazmierczak, COO of RedStone. On X, analysts like @antoinextb highlight a tecnical “double bottom bullish” on WTI, signaling a potential rebound for risky assets, including cryptos.
For crypto investors, several signals deserve attention:
The fall in oil prices, by curbing inflation and paving the way for looser monetary policy, emerges as an unexpected ally for cryptocurrencies.
In a geopolitical context soothed by the trade truce, Bitcoin and altcoins could regain their bullish momentum. For French investors, monitoring macroeconomic indicators and central banks’ decisions will be crucial to seize crypto market opportunities during this transition.
According to Endgame Macro, we are witnessing an unprecedented “high-cap compression.” Unlike the cycles of 2017 (altcoin market under $100 billion) or 2020 (200-300 billion), altcoins now operate in a market of over $1,000 billion excluding Bitcoin and Ethereum. “It’s the equivalent of a G7 country’s GDP waiting for direction,” notes Endgame Macro.
This compression, far from being a simple speculative cycle, is based on a new market maturity. “We are no longer talking about memecoins but protocols integrated with real asset tokenization, CBDCs, and payment rails,” explains Endgame Macro.
With institutional custody solutions and ready-to-deploy liquidity, capital flows will not only be retail but institutional, including corporate treasuries and sovereign funds. “When Bitcoin hits a psychological ceiling, like $100,000, the floodgates will open for altcoins,” predicts the analyst.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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