The crypto market paused its rally on Thursday as investors took profits following a strong bull run, but macroeconomic shifts including a drop in oil prices and easing geopolitical tensions could set the stage for another upward leg.
Bitcoin remained relatively steady, trading around $102,700, while Ethereum slipped from its weekly high of $2,700 to around $2,500. Top altcoins followed suit, with Ripple (XRP) falling over 2%, Solana (SOL) dropping by more than 1%, and Shiba Inu (SHIB) leading the decline at -3.6%. The broader crypto market remains on edge but hopeful, as several macro tailwinds begin to form.
Falling Crude Oil Prices: A New Catalyst for Crypto
One of the most notable developments is the sharp decline in crude oil prices. Brent crude, the international benchmark, dropped to $63 per barrel its lowest in months while West Texas Intermediate (WTI) slid to $60.20. Both benchmarks are now down more than 25% from their yearly highs.
This plunge comes as former U.S. President Donald Trump hinted at progress in indirect nuclear talks with Iran. A potential deal could see Iran return to global oil markets, adding further supply at a time when OPEC+ is already raising production. This sudden increase in supply is helping drive oil prices lower.
So why does this matter for crypto?
Lower crude oil prices often lead to cheaper gasoline and energy costs. This can help ease inflationary pressures globally. In fact, the White House noted that gasoline prices in the U.S. have fallen for three straight months. With inflation cooling, the Federal Reserve would gain more flexibility to begin cutting interest rates a scenario that historically benefits risk-on assets like cryptocurrencies.
Inflation Data Supports Rate Cut Narrative
Recent U.S. inflation figures further bolster the case. The Consumer Price Index (CPI) declined from 2.4% in March to 2.3% in April. Although core inflation held steady at 2.8%, the trend suggests that price growth is easing.
If inflation continues to drop, the Fed may feel confident in initiating rate cuts—potentially reigniting the kind of monetary environment that drove Bitcoin and altcoins to record highs in 2020 and 2021.
Global Trade Truce Lifts Risk Appetite
Adding to the bullish macro backdrop is the thaw in trade tensions between the world’s largest economies. The U.S. and China recently agreed to dramatically reduce tariffs, with U.S. levies falling from 145% to 30% and China’s from 125% to 10%. The United Kingdom also signed a trade agreement with the U.S. and is in talks with the European Union.
The resulting boost in global trade sentiment has led Goldman Sachs to lower its recession odds. Analyst David Kostin even raised the S&P 500 forecast to 6,100 from 5,100, signaling renewed optimism in traditional markets.
This matters because the crypto market often moves in tandem with equities, especially during periods of rising investor confidence and economic stability. A stronger S&P 500 could provide indirect support to Bitcoin and other digital assets.
While short-term volatility persists, the combination of lower oil prices, cooling inflation, and improved global trade conditions could provide the ideal macro environment for a sustained crypto rally. As monetary policy potentially shifts and recession fears subside, Bitcoin and altcoins may be poised to benefit from renewed capital inflows into risk assets.
