The crypto market remained on edge on Thursday as some investors booked profits following the recent double-digit gains.
Bitcoin (BTC) price was trading at $102,700, while Ethereum (ETH) fell from this weekâs high of $2,700 to $2,500. Other top altcoins like Ripple (XRP), Solana (SOL), and Shiba Inu (SHIB) fell by over 4%.
Bitcoin Ethereum, crude oil price chart | Source: crypto.news
How falling crude oil prices may boost the crypto market
A potential catalyst for Bitcoin and other altcoins is the ongoing crash in crude oil prices. Brent, the international benchmark, fell for the second consecutive day, reaching a low of $63. Similarly, West Texas Intermediate declined to $60.20, its lowest level since May 9. Both benchmarks have fallen more than 25% from their highest levels this year.
Prices dropped as Donald Trump hinted that his administration was making progress in indirect talks with Iran. A potential agreement would see Iran halt its nuclear program in exchange for sanctions relief. A likely outcome would be Iran increasing oil exports at a time when global supplies are already rising. At its last meeting, the OPEC+ cartel voted to increase production for the second consecutive month.
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Falling crude oil prices could support the crypto market by lowering gasoline costs, which would reduce inflation. In a post on Wednesday, the White House noted that gasoline prices had declined for three consecutive months.
Lower inflation would, in turn, give the Federal Reserve room to start cutting interest ratesâan outcome that would benefit cryptocurrencies and other risk-on assets. For example, Bitcoin and most altcoins surged in 2020 and 2021 as the Fed aggressively slashed rates.
Economic data released this week showed that US inflation ticked lower in April. The headline Consumer Price Index dropped from 2.4% in March to 2.3%, while the core inflation remained at 2.8%.
Trade truce to boost crypto and stocks
The other macro catalyst for the crypto market is the recent trade truce between the US and China. This truce has led the two countries to lower their tariffs dramatically. The US lowered its levies from 145% to 30%, while China brought its levies from 125% to 10%.Â
The U.K. also reached a trade agreement with the U.S. last week and is negotiating similar deals with other countries, including the European Union.
As a result, analysts now believe that trade and recession risks have subsided. In a note on Wednesday, Goldman Sachsâ David Kostin lowered his recession odds and boosted his S&P 500 forecast to $6,100 from $5,100.Â
A strong stock market would also benefit cryptocurrencies due to the positive correlation that often exists between the two asset classes.
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U.S. stock indices were up amid renewed trade talks between the U.S. and China, while Tesla stock gained.
U.S. stocks trended up as encouraging news on trade trickled to the public. On Tuesday, the Dow Jones Industrial Average was up 110 points or 0.26%, while the S&P 500 was up 0.41%. Meanwhile, the tech-heavy Nasdaq was up 0.38%.
Traders are keeping a close eye on trade talks between the U.S. and China, currently taking place in London. The biggest issues the teams tackled was U.S. access to Chinese rare earth minerals, as well as Chinaâs access to advanced computer chips.
Dow Jones Industrial Average heat map | Source: TipRanks
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China suggested it was willing to ease restrictions on some companies that need rare earth minerals. However, the country is still not prepared to relinquish control completely. Despite this, Trump suggested that he was getting âgood reportsâ from the talks, but also cautioned that âChina is not easyâ to negotiate with.
At the same time, the U.S. and India made substantial progress in their trade negotiations. According to sources from the Indian government, the two countries had a productive discussion, focusing on industrial and some agricultural goods.
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Tesla recovers on robotaxi announcement
Stocks of Tesla were up 3.25% as the public feud between its CEO, Elon Musk, and U.S. President Donald Trump cooled off. Notably, on June 10, Trump made some conciliatory comments toward Musk and stated that he was open to talking to the tech CEO again.
At the same time, traders focused on new developments in its robotaxi business. Tesla received a license to operate autonomous vehicles in the state of Texas, with tests scheduled to begin on June 12 in Austin. Still, some analysts are skeptical about whether Musk can deliver on his promises of fully autonomous, non-manned vehicles.
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Once one of the cheapest nations to mine Bitcoin in, Kuwait has cracked down on the practice, citing rising electricity demands amid an escalating energy crisis.
Crypto miners are once again facing regulatory pressure due to their energy use. On Thursday, May 1, Kuwait initiated a crackdown on crypto mining sites, accusing them of being a major strain on the nationâs electric grid.
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According to the countryâs interior ministry, the country started a widespread operation targeting homes that engaged in crypto mining. Local media reported that the sweep resulted in investigations of over 60 individuals suspected of engaging in crypto mining.
Crypto mining operations âconstitute an unlawful exploitation of electrical power ⦠and may cause outages affecting residential, commercial and service areas, posing a direct threat to public safety,â the ministry said.
Kuwait struggles with rising energy consumption
The move comes as the nation faces recurring blackouts, caused by rapid population growth and rising temperatures. In May, temperatures range from 32°C (90°F) to 39°C (102°F), placing major strain on the electric grid. Widespread air conditioning use is a significant contributor to overall electricity demand.
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At the same time, Kuwait ranks within the top 20 countries in the world with the cheapest electricity. According to one report, electricity in Kuwait costs just 2.9 cents per kilowatt-hour, much lower than in most industrialized countries.
Because electricity is one of the most important inputs in proof of work mining, miners in places like Kuwait are more competitive than in many other countries. This has made it an attractive nation for crypto miners, coming out as one of the cheapest places to mine crypto.
While crypto mining was not the only factor contributing to high energy use, Kuwait was not the only country that banned the practice. Earlier, Russia and China, both countries that boast cheap energy, banned the practice. Russia cited strains on the electric grid, while China banned mining due to its commitment to a green energy transition.
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