Bitcoin’s (BTC) near-term trajectory is being shaped less by crypto-native factors and more by the direction of oil, as macro conditions take center stage.

BTC has climbed back to roughly $70,900 from early-week lows near $67,000, following a broad risk-on move triggered by the U.S.-Iran ceasefire, which sent crude prices tumbling about 15% to below $100 per barrel.

Still, the recovery lacks conviction. Bitcoin has reclaimed the $70,000 level multiple times in recent weeks, but each attempt has failed to generate sustained follow-through.

Analysts at Bitfinex argue that oil remains the key variable. A prolonged 15%–16% decline in crude would likely shift expectations around monetary policy, encouraging markets to price in earlier rate cuts and providing a structural boost to non-yielding assets like bitcoin.

Such a move would also help alleviate inflation pressures, potentially giving the Federal Reserve more flexibility to ease policy later this year.

Market positioning suggests that, if conditions align, bitcoin could see a sharp upside move. A dense pocket of leveraged short positions sits just above current levels, creating the potential for a squeeze-driven rally.

“Roughly $6 billion in shorts are clustered between $72,200 and $73,500,” said Adam Saville Brown of Tesseract Group. “A break through that range could trigger a cascade of liquidations, opening the path toward $80,000.”

For now, though, rate-cut expectations remain subdued. Elevated energy prices risk keeping inflation sticky, which could leave the Fed maintaining a higher-for-longer stance, with rates holding near 3.5%.

Complicating the outlook, the geopolitical backdrop is already deteriorating. The ceasefire that sparked the recent rally is showing signs of strain, with renewed tensions and reports of disruptions to shipping through the Strait of Hormuz.

That raises the possibility of another surge in oil prices, which could quickly shift markets back into risk-off mode.

“The downside scenario is straightforward—if the ceasefire breaks down and oil rebounds above $100, sentiment likely reverses,” Brown said.

Bitfinex analysts added that crude could spike toward $120 if disruptions in the Strait persist, further undermining the case for near-term policy easing.

With the ceasefire set to last just two weeks, markets are effectively navigating a binary setup. The path of oil—and its implications for inflation and interest rates—will likely determine bitcoin’s next decisive move.