Bitcoin rebounded above $84,000 on September 24 as reports of US-Iran talks raised hopes for reopening the Strait of Hormuz. The recovery followed a drop toward $83,000 while oil prices and inflation concerns remained elevated.
BTC traded near $84,300 after recovering from its intraday low. Other cryptocurrencies also pared earlier losses as investors reacted to reports of diplomatic progress. However, no agreement had been finalized.
What Are US-Iran Talks Proposing?
According to Reuters, negotiators in New York are considering a phased approach to ending the dispute. This entails Iran reopening the Strait of Hormuz and the US lifting its economic embargo.
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One major hurdle in the US-Iranian negotiations is that neither side wishes to compromise first on their negotiating stance. While Iran wishes to get some economic respite, the US is keen on unrestricted passage through the vital waterway.
An Iranian official informed Reuters that the dispute could be ended in phases. Iran has also been considering separating the fee it wishes to impose on the passage of ships through the Hormuz Strait from the negotiations.
But there are conflicting reports about the talks. A reporter seen to be associated with Iran’s leadership rubbished the Reuters report, adding that there were no ongoing negotiations. The White House and the US State Department had yet to respond to Reuters queries.
Why Are Gulf Leaders Concerned About Hormuz?
US-Iran talks have also brought into question the strategy of the United States. The leaders from the Gulf region have met President Donald Trump in New York and have been seeking clarification regarding his strategy. There was fear of military operations if negotiations failed.
The regional authorities have also refused any deal involving the control of Tehran over the Hormuz shipping route. Freedom of navigation was the primary goal, and diplomacy aimed at preventing any conflict.
According to Reuters, Ebtessam al-Ketbi, the president of Emirates Policy Center, has questioned the strategy of the United States in the long run. Alan Eyre, a former American negotiator, believed that the blockade would encourage Iran to escalate.
How Are Oil Prices Affecting Bitcoin?
Energy markets still have some degree of volatility amid US-Iranian talks. On September 24, Brent crude gained to over $105 on speculation about disruptions in supply. After that, crude lost some of its gains after a report suggesting a phased deal.
The crisis has had an impact on the transport of energy through the Strait of Hormuz. Crude and diesel prices at higher levels raise concerns about inflation. This also impacts US monetary policy expectations.
According to Reuters, US shares rebounded from session lows amid the news of talks between Iran and the United States. The S&P 500 and Nasdaq lost less than before. Even Bitcoin rebounded amid the diplomatic news.
When Could Fed Policy Affect Bitcoin?
The Federal Reserve hiked interest rates by 25 basis points on September 16. The hike brought the federal funds target rate range to 3.75%-4%. According to officials, inflation is persisting at a higher level than their 2% target.
Bitcoin managed to reach an eight-month peak of more than $86,000 on September 21. The move came after ETF flows increased amid better market sentiments in spite of the hike. Bitcoin has since fallen due to oil prices and rising Treasury yields.
More tight monetary policy may be a worry in the market. Rising interest rates may affect the demand for risky assets such as cryptos. Traders will be watching inflation numbers before the next Fed meeting.
What Do Crypto Traders Expect From US-Iran Talks?
US-Iran talks have prompted some action within the field of prediction markets. Data from Polymarket indicates that the traders put at 59% likelihood the continuation of the US-Iran ceasefire until October 31.
This particular contract will be settled depending on whether there is any US military action of certain criteria against Iran. The odds are formed by the market activity and not any concrete diplomatic decision.
So far, the recovery of Bitcoin was triggered by news of some breakthroughs. Among other things that matter include oil prices, monetary policy, and events related to Hormuz.
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