Why isn't Bitcoin rising when oil prices are falling?

▲ Bitcoin (BTC), oil price drop/ChatGPT generated image ©

Bitcoin (BTC) is barely maintaining its balance below $77,000. Despite a successful rebound fueled by expectations of US-Iran negotiations, the market still lacks a clear direction due to ongoing geopolitical risks in the Middle East and institutional capital outflow.

According to investment media FXStreet on May 26 (local time), Bitcoin has fallen more than 6% in the past two weeks and is currently trading sideways around $77,000. Bitcoin had risen to $83,000 earlier this month but fell to $74,000 last weekend before rebounding. Market participants cited expectations of US-Iran peace talks and the expanding institutional adoption of cryptocurrency derivatives as reasons for the rebound.

However, Middle East risks remain a market variable. International oil prices plummeted 5% early in the week, falling below $100 per barrel, driven by expectations of progress in US-Iran truce negotiations. However, subsequent US military attacks on Iran raised doubts about the possibility of a successful agreement. While oil prices remaining below $100 are positive for Bitcoin in terms of easing inflation concerns, there is also a possibility that risk-averse sentiment could resurface if geopolitical tensions escalate again.

The market is also noting the US Securities and Exchange Commission (SEC)'s conditional approval for the listing of Nasdaq PHLX's Bitcoin cash-settled option product (QBTC). This product is settled in US dollars and allows investors to trade through regular brokerage accounts without a separate cryptocurrency derivatives account. The media evaluated this as part of the expanding institutional incorporation of digital assets.

However, institutional investor demand remains sluggish. US spot Bitcoin ETFs recorded a total net outflow of $1.26 billion last week, marking the largest weekly capital outflow since January this year. The market believes that continuous ETF fund outflows are a key factor limiting Bitcoin's upside.

Technically, Bitcoin is currently moving within an ascending channel. It recently faced resistance near the 200-day Simple Moving Average (SMA) at $82,800, then temporarily broke below the 50-day SMA, falling to $74,200 before rebounding. The media analyzed that if buying pressure can hold the 50-day SMA, a retest of $80,000 and $82,500 could be possible. Conversely, if the 50-day SMA fails to hold, a retest of the lower channel at $74,000 and $72,200 is possible.

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