Bitcoin Nears $81,000 as Oil Above $110 Sparks Rate-Hike Bets

Oil prices above $110 have revived bets on interest rate hikes, pushing bitcoin towards $81,000, according to Bitcoin Magazine.

After a surge in oil prices, bitcoin's price fell on Thursday, wiping out the gains it had notched earlier in the week.

In New York trading on Thursday, the top cryptocurrency dropped nearly 4% over 24 hours, briefly touching a low of $81,331.

Just a day earlier, bitcoin's price had been approaching $85,000, with investors returning to tech stocks after SpaceX's earnings report from Elon Musk.

However, tensions in the Middle East drove oil higher, fueling inflation concerns in the U.S. A spike in oil can, at least temporarily, weigh on bitcoin and other "risk-on" assets, as it raises the likelihood of the Federal Reserve hiking rates.

Historically, bitcoin has benefited from low interest rates, which boost liquidity, and has occasionally moved in tandem with tech stocks and the Nasdaq.

Equities fell on Thursday following reports of additional attacks by Yemen's Houthi group on Saudi Arabia, which stoked concerns about oil supply disruptions and a broader Middle East conflict.

Typically, bitcoin experiences downward pressure when war news breaks and rallies on ceasefire hopes.

In February, when the U.S. and Israel launched their first attack on Iran, bitcoin nosedived, and it remained volatile amid war news in March and April.

The rise in oil is fueling what many politicians describe as an affordability crisis in the United States. Americans head to the polls on November 3, with surging inflation among the top issues.

The Federal Reserve has stated that bringing down inflation in the world's largest economy is its foremost priority.

Even though bitcoin's price has dipped, the cryptocurrency just recorded its strongest quarter in years, with analysts noting it has entered a bull market after climbing above its 365-day moving average.

Last month, bitcoin brushed off the Federal Reserve's interest rate hikes and lawmakers' obstruction of the landmark Clarity Act crypto legislation.