Bitcoin Price Prediction: US-Iran Tensions, Fed Rate Hike Odds Jump

Bitcoin price pulled back slightly on Monday as US-Iran tensions rose and as odds that the Federal Reserve will hike interest rates later this year jumped.

BTC also reacted to a big ETF outflow on Friday that ended a two-week inflow streak. It was trading at $77,935 on Monday, down from this week’s high of $81,330.

Bitcoin Price Falls as US-Iran Tensions Rise

BTC price retreated as investors embraced a risk-off sentiment after the latest US strikes against Iranian targets. In a statement, CENTCOM said that it launched strikes against military targets that were trying to lay mines at the Strait of Hormuz. These strikes resulted in the killing of two people, with Iran vowing revenge.

Another wave of tit-for-tat attacks will be risky for Bitcoin and other risky assets because of the impact on inflation. Data released last week showed that the US personal consumption expenditure (PCE) inflation remained above 3% in July. Inflation has stayed above the Fed’s 2% target in the past five years.

This situation will get worse as crude oil prices jump. Brent jumped and crossed the important resistance level of $90 on Monday, and this rally may continue in the foreseeable future.

Iran has an incentive to escalate. Reports show that the military has reconstituted its weapons, with the country moving to newer ones. These weapons are said to be faster and can manoeuvre as they approach their targets.

On the other hand, reports show that US weapons are at significantly low levels, while the midterm elections are nearing. As such, it believes that it has more room on the escalation ladder.

Federal Reserve Rate Hike Odds are Rising

Bitcoin is also reacting to the rising odds that the Federal Reserve will hike interest rates after last week’s speech at the Jackson Hole Symposium. In this speech, Kevin Warsh talked about the steady inflation in the US and the need for the bank to curb it.

He hinted that the bank will use all the tools it has to bring it down. One way for the bank to do that will be to hike interest rates, a move that will irk President Donald Trump.

Odds that the Fed will hike interest rates jumped to 68% on Polymarket. It has jumped to the highest level since August 2, and this trend will continue, especially if US-Iran tensions escalate.

The risk, however, is that the US economy is no longer growing as it used in the past. For example, the economy lost 23k jobs last month. At the same time, the second-quarter growth, excluding the AI investments, was weak.

On the positive side for Bitcoin, Strategy has reduced its selling. Instead, it has leaned on selling its shares to raise capital.

In a statement, Michael Saylor said that “we’re back,” possibly hinting that the company was planning to start buying. In a recent statement, Saylor hinted that he would start buying later this year once the preferred shares stabilize.

Bitcoin Price Prediction: Technical Analysis

The daily chart shows that the BTC price has pulled back in the past few days. It moved from a high of $81,331 to the current $77,915. Its highest point this month coincided with the highest level in May this year. As such, this retreat may be a part of profit-taking since it hit a major resistance.

The coin is slowly forming a bullish flag pattern, which is made up of a vertical line and a horizontal channel. Therefore, there is a likelihood that it will have a strong bullish breakout, potentially to $85,000. This view will be confirmed if it moves above the key resistance at $81,330.