Bitcoin rises after US-Iran tensions ease

Bitcoin rose on Monday after the temporary cessation of military strikes between the US and Iran over the weekend pressured oil prices downward and improved sentiment in global markets. The largest cryptocurrency added about 1.5% in early trading and held near $64,000, as investors recalibrated their assessments of geopolitical risk ahead of the Federal Reserve's expected interest rate decision this week.

Hopes for peace brought down oil

The growth came after President Donald Trump's decision to halt US airstrikes against Iran following nearly two weeks of escalation. The Pentagon ended operations late Friday, and no new attacks were reported over the weekend. Iran also responded with a ceasefire: on Sunday, a senior Iranian official told Reuters that Tehran would maintain its pause "as long as the United States does the same."

The reaction in the oil market was immediate. The price of Brent fell by over 5% to around $91 per barrel on Monday, and the US variety West Texas Intermediate became cheaper by approximately 5.4%, according to Reuters. The Associated Press reported a decline of 4.9% in early Sunday trading, to $92.02 per barrel.

The retreat in tensions provided a breather after several weeks of geopolitical turmoil, which had pushed oil to a two-month high and pressured risk assets. Ethereum also rose, with the second-largest cryptocurrency by market capitalization trading around $1,900, after being near $1,770 at the beginning of July.

The Fed remains the next factor

Market attention is now focused on the Federal Open Market Committee meeting, which begins on Tuesday, with the interest rate decision expected on Wednesday at 2:00 PM Eastern Time. According to prevailing forecasts, the Fed will keep the benchmark interest rate in the 3.5–3.75% range for the fifth consecutive meeting, but the jump in oil prices has raised expectations for future tightening.

According to CBS News data, the CME FedWatch tool shows a 38% probability of a rate hike this week, compared to 12% a week ago, although the majority of economists still do not expect a change. EY-Parthenon chief economist Gregory Daco stated that the September meeting "could prove to be the first serious test of whether the recent improvement in inflation indicators is sustainable."

Fragile lull

The diplomatic window remains narrow. The 60-day temporary ceasefire agreement, signed in mid-June, has already passed its halfway point, but key issues, including the Iranian nuclear program, remain unresolved, NPR reports. Regional mediators Qatar, Oman, and Pakistan are making efforts to organize indirect negotiations. Trump warned that "full-scale war" could resume if Tehran does not meet American demands.

For crypto markets, the weekend events were reminiscent of the April moment, when a brief US-Iranian truce pushed Bitcoin above $72,000 against the backdrop of a collapse in oil quotes. Whether the current relief will persist depends primarily on whether diplomacy gains momentum before military options move back to the forefront.