Bitcoin retreated below $70,000 on Tuesday as the International Energy Agency proposed the largest release of strategic oil reserves in its history to counter soaring crude prices.
The proposed market intervention would exceed the 182 million barrels of oil that member nations deployed in 2022 following Russia’s invasion of Ukraine, according to the Wall Street Journal. The IEA convened an extraordinary meeting on Tuesday to deliberate the plan, which could be adopted on Wednesday if no member nations object.
“Bitcoin has historically shown very little direct correlation with oil prices,” Markus Levin, co-founder of XYO Network, told Decrypt. “What tends to matter more is whether geopolitical tensions spill into broader financial markets.”
The extraordinary energy maneuvering highlights a fragile macroeconomic backdrop that has kept cryptocurrency traders on the defensive, with general market sentiment trapped in “extreme fear” for over a month.
While oil supplies do not directly dictate Bitcoin’s daily movements, surging crude prices often stoke fears of sticky inflation and higher-for-longer interest rates—an environment that typically pressures risk assets, Decrypt previously reported.
Bitcoin is currently trading around $69,240, down 1.9% on the day and down 5.9% from last Thursday’s peak of $73,645, according to CoinGecko data. The seven-day and 30-day 25 delta skew—an indicator tracking the demand for puts versus calls—is hovering around negative 6%, according to options data from Deribit. This demonstrates that traders are actively paying a premium to hedge against further downside.
On prediction market Myriad, owned by Decrypt‘s parent company Dastan, users have flipped negative on Bitcoin’s prospects in the last day, now placing a 53% chance on its next move taking Bitcoin to $55,000 rather than $84,000.
The market remains cautious, pointing to the downside skew in derivatives markets as a sign that traders are still paying for protection, Sammi Li, CEO of JU.COM, told Decrypt. But if the IEA’s coordinated releases manage to restrain energy prices, the move may calm macroeconomic tensions and help overall market sentiment, Li added.
For a recovery to take hold, spot market demand must build, and derivatives positioning needs to return to a more balanced state, according to Li. If macroeconomic uncertainty lingers and subsequent rallies continue to be sold into, a further slide toward the $54,000 to $55,000 range would not look unusual, Li said.