Over the weekend, the conflict between Saudi Arabia and the Houthi forces escalated. Trump has been repeatedly hinting at taking action against Iran.
The Strait of Hormuz—this week, for the sixth time, a tanker was attacked.
By common sense, the more chaotic the Middle East becomes, the more the market should panic and risk assets should fall.
But Bitcoin is rising.
On Monday, after U.S. stock index futures opened, BTC accelerated upward and at one point nearly hit 87,000.
If you think this is because of “safe-haven” sentiment, then you’ve completely misread the script.
The real driving force is hidden inside the Federal Reserve.
This week, the Federal Reserve’s “number two” Deputy Chair, Jerome (Jerrey) Powell (Jefferson), said something at the University of Virginia:
“Any future policy adjustments should be based on a careful assessment of data trends, and reaching a judgment may require more time.”
“The third-in-command,” New York Fed Chair William Williams, said earlier this week words that were almost identical: “At this time, there is no urgent need to take action.”
On the same day, Vice Chair Bowman, who is responsible for regulation, also added: “At this time, we do not see an urgent need to take further action.”
Jefferson, Williams, Bowman—three people, all have permanent voting rights on the FOMC.
Evercore ISI’s interpretation: “Authoritative.”
With little forward guidance coming out of Waller’s camp, the three permanent voting members aligned their tone to the same frequency—this isn’t a coincidence; it’s coordinated action.
The market immediately repriced.
According to the CME “FedWatch,” the probability of a rate hike in October plunged from 68.6% a week earlier to 24.9%. The probability of holding rates steady rose to more than 70%.
Goldman same-day pushed its second rate-hike expectation from October to December. In the report’s exact wording: “The likelihood of a rate hike in October is low; ultimately, the FOMC will very likely conclude that there is no need for further rate hikes.”
But there’s a gap in understanding here.
Rate-hike odds have fallen, but the direction hasn’t changed. Kashkari said, “The current monetary policy’s restrictions on the economy may be limited.” Logan was even tougher—he directly said the September rate hike is just the “first step,” and the target range still needs to be raised by another 50 basis points or more.
This isn’t a pivot. This is “biding one’s time with stillness.”
The pace has loosened, but the direction hasn’t. What the market reads isn’t “the Fed is about to cut rates,” but rather “October won’t come with a second knife right after the first.”
But that’s enough.
Rate-hike expectations cool off → U.S. Treasury yields pull back from their highs → valuation pressure on risk assets eases → BTC breaks through the $85,000 sell-wall zone.
Data from Glassnode: Around $85,000 there was a “wall of sell orders.” The price repeatedly hit it and couldn’t get through for a week. But buy-side demand ultimately absorbed it, and the remaining sell orders were pulled.
After liquidity above weakened, the upward pace accelerated. Bitcoin briefly touched $86,857 intraday, and short-liquidations totaled $122 million.
This isn’t “Bitcoin went up, so everyone bought.” It’s “nobody up top is selling, so the price bounces on its own.”
Iran has been repeatedly attacking oil tankers in the Strait of Hormuz; this week it’s already the sixth time. In September, the strait faced at least 16 attacks.
Strangely, oil prices barely moved.
Brent crude spot is around $106, and the intraday gain is less than 0.25%.
But Bitcoin reacted violently.
Why?
The latest report from the Bitcoin Policy Institute provides the answer: Driven by the Iran conflict, the annual value of blockchain transactions in the Middle East and North Africa is expected to reach $350 billion in 2025–2026, more than three times the roughly $100 billion in 2022.
The report called out Egypt, Turkey, Lebanon, and Iran: in countries where currency depreciation is harsher, demand to use Bitcoin and stablecoins is stronger.
War isn’t the direct cause of BTC’s rise. But it is accelerating changes in how Middle Eastern capital allocates assets.
The wealthy are running to Dubai’s regulated markets, while ordinary people are running into Bitcoin and stablecoins.
Capital doesn’t wait for anyone.
Only when three lines converge do we get today’s $87k.
The first line: the Fed’s third-in-command coordinated and then held back—October’s rate-hike probability was smashed from 68.6% to 24.9% → the technical window opened.
The second line: the $85,000 sell-wall gets digested by buy-side demand; liquidity above weakens → resistance disappears.
The third line: the Middle East conflict accelerates a structural shift of regional capital toward digital assets → incremental funds move in.
You think it was “safe-haven demand” that pushed BTC higher?
No. It’s that rate-hike expectations fizzled out and gave it a technical window, while the relocation of Middle East capital provided the underlying demand…
While everyone is talking about “Middle East safe-haven” demand, smart money is already calculating rate-hike odds.
What you see is the fighting. What they see is liquidity.
Whether BTC can hold above $87k and rush toward $90k depends on two things:
First, can ETF inflows re-accelerate? On September 21, nearly $1 billion of net inflows were recorded in a single day, but since then they kept falling; by the 28th they had dropped to $24 million.
Second, can trading volume keep up? Prices are up, but average daily trading value is about $6.4 billion, still at the low point since ETFs were listed.
Price can be pushed up by sentiment, but only volume can keep it standing.
War is burning, and rate hikes are fading out.
Bitcoin’s story—only just reached Chapter Two.