Concerns over Bitcoin resurface as interest rate hike expectations increase and bond markets decline.

Currently, rising oil prices and ongoing geopolitical conflicts are fueling inflation concerns and diminishing the value of traditional safe-haven investments.

Key points:

• Markets are now significantly factoring in the likelihood of a forthcoming U.S. rate increase, a stark contrast to weeks prior when discussions revolved around the potential number of Federal Reserve rate reductions anticipated for 2026.
• Since the onset of the Iran conflict, oil prices have surged by 50%, impacting inflation and economic growth.
• The global bond market is experiencing a selloff, with the U.K.’s 10-year gilt yield surpassing 5% for the first time since 2008.

Just weeks ago, the discourse regarding interest rates in the U.S. focused on the extent of Federal Reserve rate cuts expected in 2026. However, with the economy showing minimal indications of slowing, inflation persisting above the central bank’s 2% target, and oil prices having risen by 50% over the last three weeks, traders are starting to consider a potential rate increase as early as April.

As reported by CME FedWatch, the probability of the Fed tightening monetary policy at its upcoming April meeting has climbed to 12%. This is an increase from 0% just a week ago and marks a significant shift from two months ago, when the prevailing belief suggested a rate cut was likely that month.

Data from February indicated that annual headline inflation was at 2.4% and core inflation was at 2.5%. These figures were recorded before the outbreak of the Iran conflict and the subsequent 50% rise in oil prices.

The long-term segment of the bond curve has experienced a notable selloff, with the 10-year U.S. Treasury note rising by another 10 basis points on Friday to 4.38%, compared to below 4% at the start of March.

The bond selloff is widespread. In the U.K., 10-year gilt yields have surged above 5%, an increase of 15% over the past month, reaching their highest levels since 2008.

Is Bitcoin leading the way?

According to Bloomberg, the S&P 500 is poised for a fourth consecutive weekly decline, currently down approximately 5% since late February. The Nasdaq has similarly decreased, including a 1.2% drop on Friday.

"Bitcoin has once again served as the early indicator in the macroeconomic landscape," stated Andre Dragosch, European Head of Research at Bitwise, who noted, “At present levels, bitcoin is already reflecting expectations of a recession, while numerous traditional assets do not," he added.

Bitcoin remains around $70,000 and, apart from oil, has been one of the top-performing assets since the conflict began, while metals show continued signs of declining prices, with gold dropping a further 2% on Friday.