Bitcoin rebounded during early U.S. trading on Wednesday, climbing back toward the $71,000 level after briefly slipping to around $69,000 earlier in the session. The recovery appeared to coincide with a sudden drop in oil prices, which improved sentiment across risk markets.

The largest cryptocurrency, Bitcoin, quickly rose from the $69,000 area to approach $71,000 during the U.S. morning hours.

Other major cryptocurrencies followed a similar upward move. Ethereum, Solana and XRP all recorded sharp gains as the broader crypto market strengthened.

The rally appeared to be linked to a rapid reversal in oil markets. Crude had surged earlier in the session before suddenly falling by about $3 per barrel within minutes. Even after the drop, April futures for West Texas Intermediate crude oil were trading around $85, still roughly 2% higher on the day at the time of writing.

The decline in crude prices also lifted equities. The tech-heavy Nasdaq Composite moved from a slight loss to a gain of roughly 0.5% in early U.S. trading.

Crypto-linked stocks were mixed. Shares of Strategy, Galaxy Digital and Bullish posted modest gains, while Coinbase and eToro slipped slightly.

So far this week, swings in oil prices linked to the ongoing conflict involving Iran have largely driven risk assets. Stocks and cryptocurrencies dropped late Sunday after crude briefly surged to around $120 per barrel but later rebounded once oil prices retreated.

Inflation data meets expectations

Fresh U.S. inflation figures released Wednesday were largely in line with economists’ forecasts. The February Consumer Price Index rose 0.3% month over month, bringing the annual inflation rate to approximately 2.4%.

However, next month’s data could look quite different as geopolitical tensions involving Iran may push energy costs higher, potentially affecting inflation readings.

This raises questions about how the Federal Reserve might respond if inflation begins to climb again. Policymakers must decide whether to treat any increase as a temporary energy-driven shock or adopt a more hawkish stance after previously underestimating inflation during the last cycle.

According to Stephen Coltman, investors will be watching next week’s Federal Reserve meeting closely for clues on how officials intend to handle the situation.

As for bitcoin, Coltman suggested that the market may have already priced in the likelihood of stronger inflation data next month.