Bitcoin traded near the $77,800 level on Monday after falling last week, as investors weighed escalating tensions in the Middle East, surging oil prices and growing expectations that the U.S. Federal Reserve will raise interest rates later this week.
The world’s largest cryptocurrency rose 1.19 percent to $77,723 by 11:53 GMT, after losing around 3 percent last week.
Broader cryptocurrency markets also edged higher but remained below recent highs as traders turned cautious ahead of a packed week for global central banks and a potential vote in the U.S. Congress on the long-delayed Clarity Act.
Middle East tensions fuel inflation concerns
Bitcoin’s moves came as a broader selloff in risk-sensitive assets was compounded by another surge in oil prices amid worsening conditions in the Middle East.
The United States and Iran remained at odds over the Strait of Hormuz, while Yemen’s Iran-aligned Houthis opened another front by attacking Saudi Arabia and shipping in the Bab al-Mandab Strait.
The developments raised concerns over further disruptions to Middle Eastern oil supplies. Houthi attacks could potentially put another 4 to 5 percent of global oil supply at risk, adding to the risk premium in crude prices.
Higher energy prices have, in turn, intensified concerns over inflation and the prospect of tighter monetary policy globally, a backdrop that could weigh on Bitcoin and other speculative assets.
Markets are increasingly pricing in expectations that the Federal Reserve will raise interest rates by 25 basis points at its meeting later this week, with policymakers warning that inflation remains persistent.
Stronger-than-expected inflation data for August, released last week, further strengthened expectations for a near-term rate increase.
Higher interest rates typically put pressure on riskier assets such as cryptocurrencies by increasing the relative appeal of traditional income-generating investments and tightening financial conditions.
Clarity Act vote in focus
Crypto investors are also watching developments in Washington as Congress returns, with a potential vote on the Clarity Act expected to come into focus.
Pro-crypto lawmakers have called for a vote on the long-delayed legislation on Tuesday. However, uncertainty remains over whether the vote will proceed and whether the bill can secure the 60 votes required for passage in the Senate.
The legislation has faced opposition from both crypto industry participants and banking lobbyists over provisions concerning stablecoin yields. Lawmakers have also debated an ethics provision that could restrict government officials from investing in cryptocurrencies.
Other major cryptocurrencies posted modest gains as traders remained cautious ahead of several key central bank meetings.
Ether, the second-largest cryptocurrency by market value, rose 1.12 percent to $2,508.66, while XRP gained 4.02 percent to $1.3975.
Solana gained 1.61 percent, Cardano advanced 2.39 percent, while BNB rose 0.77 percent.
Among memecoins, Dogecoin edged up 0.60 percent, while $TRUMP rose 0.7 percent.
Beyond the Fed, the Bank of Japan and Bank of England are also scheduled to meet this week, with the Bank of England widely expected to raise interest rates, adding to uncertainty across global financial markets.
