Oil cannot be the story of 2026. The macro narrative driving the “cut now, liquidity now” trade depends on whether disinflation is sustained.
However, on February 18, Brent soared 4.35% to $70.35 and WTI jumped 4.59% to $65.19 on February 18 as the risk of conflict between the US and Iran resurfaced and negotiations between Russia and Ukraine ended without progress.
This is more than just an “oil trader” print. This is a printout of the rate and, by extension, a printout of Bitcoin.
Bitcoin does not trade barrels. It trades the path of financial situation. If oil moves on concerns about supply disruptions, it will hit a pressure point that will keep interest rates high for an extended period of time.
Risk premium, not demand
This leap did not mean that growth was accelerating. It was geopolitics that injected a premium into this curve.
Buying accelerated in the closing stages after Israel raised its alert level, hinting at the possibility of U.S. action against Iran. Iran’s Revolutionary Guards conducted a drill to temporarily close part of the Strait of Hormuz.
Peace talks between Russia and Ukraine in Geneva did not lead to any progress.
The U.S. Energy Information Administration estimates that oil flows through the strait will average about 20 million barrels per day in 2024, representing about 20% of global petroleum liquids consumption.
Traders do not need to stop ongoing trading to reprice risk, just the possible disruption if the bottleneck is very large.
A rise in oil prices does not necessarily indicate a change in the price of Bitcoin. A fork will be created.
On the other hand, there is a narrative that high oil prices will drive up inflation expectations, yields will rise, risk assets will be sold off, and Bitcoin will be the first to bleed. Meanwhile, another narrative points to a premium bid with war risks for a hedged basket of oil, gold, and possibly Bitcoin.
February 18th showed which government has the upper hand. Gold rose about 2%, the dollar index rose, US Treasury yields rose and Bitcoin fell 2.4% to about $66,102.37.
This combination seems to be a “tightening of conditions” rather than “Bitcoin as a hedge”.
Oil eliminates inflation, Fed’s patience weakens
Oil shocks disrupt the deflation process because energy rapidly impacts transportation and input costs.
A December 2025 San Francisco Fed study found that two-year Treasury yields have become more sensitive to oil supply surprises in recent years than they were before 2021. This is important for Bitcoin because the 2-year yield is an abbreviation in the market for “how much and how quickly.”
When oil prices rise due to supply risks, the market asks, “Will this fix inflation again?”
Trade is vulnerable during “cutting season.” If energy headlines keep Brent up, markets will reprice production cuts, strengthen the dollar, increase real yields and reduce risk appetite.
Bitcoin is often hit harder than stocks when leverage becomes concentrated and the macro environment becomes tougher.
Three future scenarios
There are three possible future scenarios for Bitcoin.
The first scenario occurs when the risk premium fades. Diplomacy has eased tensions, the risk of disruption in Hormuz has receded, and North Sea Brent prices are rising towards the mid-$60s.
Citi claims easing tensions could push Brent down to $60-$62 by mid-2026. This restarts the disinflationary story and revives short-term trade. Bitcoin will benefit as financial conditions ease.
This is the most bullish path.
The second scenario occurs when the risk premium becomes sticky. Brent is holding $65-70 as geopolitical tensions remain unresolved.
The central bank remains cautious about making aggressive cuts. Bitcoin may rise on crypto-specific flows, but will battle macro headwinds. A “longer lasting” interest rate environment caps the upside.
The third scenario presents itself as an escalation of tail risk. Eurasia Group estimates there is a 65% chance that the US will attack Iran by the end of April.
Unrest in Hormuz could cause prices to soar. Bitcoin faces the most intense tensions, with hedge fund demand pulling on one side and interest rate shock pressures on the other.
When oil prices reach $80 or $90, inflation expectations rise, yields soar, and financial conditions tighten rapidly.
| scenario | Oil path (Brent range) | Macro transmission (break-even point/2Y/DXY) | Impact on policy (reduction) | How BTC works (risk and hedging) | What to look for next (1-2 metrics) |
|---|---|---|---|---|---|
| risk premium fades | Drift in the mid $60s;City $60-$62 | break-even point nice; 2Y relaxation;DXY soften as conditions ease | cut back on the table Pricing for faster/more cuts | BTC takes further action risk on (Sensitive to liquidity); “Cut soon” returns and rebounds | Brent drops below around $65 And stay there. 2Y rollover (Cut price has been reset) |
| risk premium stick | $65-70 range | break-even point sticky; 2Y continues to rise;DXY hard | Cutting is delayed/cutting is reduced; “Higher, longer” vibe | BTC may rise due to the flow of cryptocurrencies, macro cap upwardstransactions like; risk most days | Brent holds over $70 At the time of closing. DXY is on an upward trend (tighten) |
| escalation tail risk | A jump of $80-90 | break-even point jump; 2Y Pops;DXY spike (Risk-off tightening) | The cut end is pushed out Risk of rekindling of hawkish stance | BTC face identity crisis: Short-term “hedge” bids are possible, but interest rate shocks typically result in trading as follows: risk | Holmes headlines and setbacks grow; Rapid increase in break-even point along with oil |
What this means for Bitcoin traders
EIA predicts Brent will average $58 in 2026, with supply outstripping demand.
Current prices include a geopolitical premium, which analysts estimate at $4 to $7 per barrel. Given the International Energy Agency’s projected surplus of 3.7 million barrels per day, oil would trade in the high $50s without conflict risk.
The rise in the US two-year bond yield indicates that interest rate cuts are being pushed forward. If yields rise as oil prices continue to rise, the market is pricing in a prolonged tightening policy.
The key to breakeven is whether inflation expectations rise along with oil. That is the Disinflationary Stress Test.
Additionally, a stronger dollar means stricter conditions. On February 18th, DXY rose along with oil and gold, a classic “macro tightening” combination.
February 18th looked risky, with gold rising and Bitcoin falling. If Bitcoin rises in line with gold and yields stabilize, the hedging narrative will return.
Additionally, DeFi, halving, and ETF flows are also important.
But on days like February 18, Bitcoin is asking the same question as everything else: Will this oil price move force the Fed to tighten?
The uncomfortable truth is that Bitcoin’s macro identity remains in flux.
We want to be digital gold when geopolitics intensifies. However, when interest rates drive the story, it trades like a leveraged technology.
This asset cannot have both at the same time, and the oil crisis forces the market to make a choice. Now, when oil prices rise due to supply risks and inflation concerns rise, Bitcoin sells off along with risky assets rather than rising along with gold.
The next two weeks are critical.
Iran returns to Geneva with new proposals. Russia and Ukraine continue to hold talks. India’s oil purchase decision becomes clear.
Each variable is reflected in the Brent curve, the Brent curve is reflected in inflation expectations, and inflation expectations are reflected in the two-year yield, which determines whether the “near rate cut” persists.
The path of Bitcoin follows that chain. Oil shouldn’t be the story, but sometimes stories you don’t see can move the market.
(Tag Translation) Bitcoin
