Bitcoin traded at $78,524 on Tuesday, down 0.72%, while the S&P 500 closed at 7,689.80, a decline of 0.37%. Both markets came under pressure as oil prices moved toward $100 a barrel amid renewed U.S.-Iran hostilities in the Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world's oil is shipped.

Higher oil prices can contribute directly to inflation because energy costs affect shipping and manufacturing. That has added uncertainty ahead of the Federal Reserve's interest-rate decision on September 15-16. Markets are pricing roughly a 57% chance of a 0.25-percentage-point rate increase, according to the CME FedWatch tool, with other readings putting the odds at approximately 57% to 59%.

The renewed rate-hike expectations followed Friday's August employment report. U.S. employers added 162,000 jobs during the month, nearly three times the 53,000 positions economists had forecast, while the unemployment rate held steady at 4.1%. The report gave the Federal Reserve less justification to argue that the economy needs lower borrowing costs, prompting traders to take a more hawkish view of monetary policy.

The Dow Jones Industrial Average fell 614.88 points, or 1.15%, to 52,799.37. The Nasdaq Composite performed better, slipping 0.19% to 26,457.73 during Tuesday's session.

The S&P 500 opened at 7,717.81 and briefly fell to 7,689.80, a considerably narrower trading range than Bitcoin's. The index remains close to its record closing level of 7,798.99, set on August 13. HSBC has raised its year-end target for the S&P 500 to 8,100, even as markets absorb this week's macroeconomic pressure.

A rate increase would generally weigh on markets, particularly risk assets such as cryptocurrencies, because higher borrowing costs can make safer assets more attractive to traders. The latest move also marks another setback for Bitcoin following a roughly 20% rally during the summer, as the cryptocurrency again faces the historically weaker trading period referred to as “Red September.”

Bitcoin price and technical indicators

Bitcoin opened Tuesday at $79,090 and fell as low as $77,603 before settling at $78,524. The decline followed a move from a swing low of $68,858 to a high of $82,281. Bitcoin has not maintained all of its recent upward momentum, but it has also remained above much of the range established during that advance.

The pullback places Bitcoin's current “golden zone”—the price band closely watched by traders—between $73,986 and $75,569. The asset remains comfortably above that range for now.

Bitcoin's Relative Strength Index, or RSI, was 60.4. The indicator measures overbought and oversold momentum on a scale from 0 to 100 and remains in a bullish range, although it has declined from 66.1 one week earlier.

The Average Directional Index, or ADX, stood at 47.2. The indicator measures trend strength regardless of direction, and readings above 25 are generally used to distinguish an established trend from market noise. The directional lines within the indicator continued to favor buyers.

Bitcoin's 50-day exponential moving average, or EMA50, remains below its 200-day counterpart, known as the EMA200. That bearish crossover has persisted since before August's rally began. At the same time, Bitcoin closed August above its 50-month moving average for the first time since the crypto winter that began last year.

If Bitcoin maintains its momentum, the EMA50 could eventually cross above the EMA200. Such a move is known as a golden cross and is widely followed as a bullish technical indicator.

Myriad traders remain bullish

On Myriad, a prediction market built by Decrypt parent company Dastan, traders are pricing a 78.4% chance that Bitcoin reaches $84,000 before falling to $55,000. That figure is little changed from the 77% recorded one week earlier, despite Bitcoin moving between approximately $76,877 and a four-month high of $82,240 during that period.

The prediction-market pricing indicates that traders continue to assign a higher probability to Bitcoin reaching the upper target first, although the outcome remains uncertain ahead of next week's Federal Reserve decision.

Source: Decrypt

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.