Crypto prices dip as crude oil jumps to $115 ahead of US inflation report

Crypto prices continued the strong downward trend today, March 8, as the war in Iran continued, pushing crude oil prices to $115 ahead of the upcoming US consumer inflation report.

Bitcoin (BTC) price dropped to $67,000 on Sunday from last week’s high of $74,000. An index tracking the top 20 cryptocurrencies dropped by 1.29% in the last 24 hours, while the Crypto Fear and Greed Index dropped to 18.

Crypto prices dropped amid signs that the war in Iran was not about to end, which pushed crude oil prices to the highest level since 2022. The West Texas Intermediate, which ended the week at $90, soared to $115. Brent, the global benchmark, is nearing the important resistance level at $120 on Hyperliquid.

Crude oil prices soared after more countries in the Middle East slashed their production because of the closure of the Strait of Hormuz by Iran. Kuwait and the United Arab Emirates announced that they would slash production as the war continues.

Soaring oil prices has a major impact on crypto prices because of its impact on inflation. Recent macro data from the United States showed that inflation has continued falling in the past few months. Therefore, this war will change the trajectory and push inflation higher in the coming months.

Soaring inflation rate will make it hard for the Federal Reserve to cut interest rates. Indeed, data on Polymarket shows that traders have scaled down their outlook for the Federal Reserve interest rate cuts for the year.

The war in Iran is also bearish for the crypto market because Bitcoin has proven to be an unreliable hedge against inflation and geopolitical risks.

Looking ahead, crypto prices will react to the upcoming US consumer inflation report on Wednesday. Economists polled by Reuters expect the upcoming numbers to show that the headline Consumer Price Index rose to 2.5% in February from the previous 2.4%. 

Core inflation, which excludes the volatile food and energy prices, is expected to come in at 2.5. US inflation expectations have continued soaring this month as the war goes on.

Traders will focus on several cryptocurrencies this week. Pi Network price will be in focus ahead of the Pi Day event that happens on Saturday this week. Similarly, Polkadot will be in focus ahead of the tokenomics upgrade on March 12.