Bitcoin's price has experienced a significant decline this week, trading around $81,203 after briefly falling to approximately $80,922 on Thursday morning in New York. This downturn comes as the U.S. Federal Reserve shows an increasing inclination towards raising interest rates to curb inflation. Over the past 24 hours, the world's largest cryptocurrency has lost nearly 3% of its value, with a total decrease of about 4% over the last week.

Just a week ago, Bitcoin was nearing the $90,000 mark following an impressive price surge in September, marking one of the best trading quarters in several years. However, October, often referred to by cryptocurrency investors as 'Uptober' for its historically positive returns for Bitcoin, has started slowly, coinciding with a sharp rise in oil prices.

This week, Brent crude oil prices surged following new attacks on oil tankers in the Strait of Hormuz. U.S. President Donald Trump also indicated that negotiations with Iran have not progressed as he hoped. The rising oil prices this year have exerted pressure on Bitcoin and other risk assets, at least in the short term, by increasing the likelihood of the U.S. central bank raising interest rates.

In the past, Bitcoin has typically benefited from a low-interest-rate environment, where ample liquidity drives capital into riskier assets. On Thursday, Fed Governor Christopher Waller stated that continued interest rate hikes may be necessary to slow inflation, although he emphasized that the Fed remains flexible regarding the pace of rate adjustments.

Oil prices have been on the rise since the U.S. and Israel attacked Iran in February, prompting Iran to respond by closing the Strait of Hormuz. Higher energy prices are keeping inflation levels elevated in many parts of the world, including the U.S., and are contributing to a renewed increase in prices.

Despite the current downturn, some analysts believe that Bitcoin may be entering a bullish market again. The cryptocurrency has spent much of 2026 in a bear market after reaching a historic peak in October 2025. Currently, Bitcoin is still over 30% below its record high of $126,080.

The future trajectory of Bitcoin will significantly depend on oil prices, inflation expectations, and the Fed's interest rate direction. If inflationary pressures continue to rise, expectations of higher interest rates could further strain the cryptocurrency market.