Bitcoin’s $65,000 rebound looks like a relief rally, but Wednesday’s Fed decision could turn it into a trap

Bitcoin reclaimed $65,000 on Monday as a pause in US-Iran strikes revived demand for risk assets ahead of a pivotal Federal Reserve meeting.Data from CryptoSlate showed that the largest cryptocurrency rose about 1% to $65,155, while Ethereum gained 4% to around $1,964, its highest level since early June.The move came as Washington temporarily halted its strikes on Iran and Tehran said it would suspend attacks as long as the United States did the same. Brent crude dropped 6.5% to about $90.45 a barrel as investors reduced some of the geopolitical premium built into energy markets.The respite arrives just as crypto markets face another source of volatility. The surge in oil above $100 last week has sharply altered expectations for US interest rates, leaving Wednesday’s Fed decision capable of extending Bitcoin’s rebound or putting renewed pressure on it.Oil shock leaves a hawkish Fed overhangThe bigger risk for Bitcoin is that last week’s energy shock has already changed the Fed trade.Fed funds futures on Monday priced roughly a one-in-three chance of a 25-basis-point increase when policymakers conclude their two-day meeting Wednesday. That probability was just 16% a week earlier, hi...