NEW YORK — A sudden spike in global crude prices to roughly $114 a barrel on Monday rattled financial markets and dragged major cryptocurrencies lower, renewing fears that stubborn inflation could keep the Federal Reserve from cutting interest rates this summer, according to traders and analysts.
Brent futures jumped more than 4% in early trading as larger-than-expected supply disruptions in the Middle East coincided with fresh demand estimates from OPEC. Within minutes of the move, Bitcoin slipped 3.8% to about $66,200, while ether fell 4.5%. The broader MVIS CryptoCompare Digital Assets 100 index was down 3.2% by afternoon in New York.
“The correlation between energy and risk assets has been re-emerging all year, but today’s oil print was the clearest wake-up call yet,” said a London-based macro strategist at a U.S. investment bank who was not authorised to speak publicly. “If headline CPI pops back above 4% because of fuel costs, the Fed’s well-telegraphed pivot gets pushed back, and that’s toxic for duration-sensitive trades like crypto.”
Data from the CME’s FedWatch tool showed futures traders slicing the probability of a June rate cut to 42%, down from 58% on Friday. Two-year Treasury yields, often a proxy for monetary-policy expectations, climbed eight basis points to 4.78%.
Market technicians noted that Bitcoin broke below its 20-day moving average for the first time since late February. “A close under $66,000 could trigger a test of the $60,000 support zone,” said Carla Mendes, head of digital-asset strategy at São Paulo-based brokerage BLP Crypto.
The jump in energy costs arrives just days before Wednesday’s release of the U.S. Consumer Price Index for March, a print many investors expected would confirm a disinflation trend. Several analysts now caution the headline figure could surprise to the upside. A senior Fed official speaking on background said the central bank “remains data-dependent” and declined to speculate on the impact of oil.
Despite Monday’s pullback, crypto funds have attracted more than $12 billion in net inflows so far this year, according to CoinShares. Some managers argued the latest volatility is temporary. “Higher energy prices hurt sentiment, but the structural drivers for crypto adoption — institutional engagement, ETF demand and network upgrades — are still intact,” said Brian Lum, portfolio manager at Singapore-based hedge fund WaveBridge.
While traders brace for Wednesday’s inflation report, attention is also turning to next week’s International Monetary Fund meetings, where finance ministers are expected to discuss energy-linked price pressures and digital-asset regulation. Any signal that policymakers intend to keep rates elevated for longer could extend the crypto market’s downswing, analysts said.