Bitcoin’s Venezuela Oil Rally: Why The Narrative Doesn’t Hold Water

Bitcoin spikes on whispers of Venezuelan oil deals—but the fundamentals scream caution.

The Flawed Catalyst

Markets love a simple story. Headlines touting 'nation-state adoption' and 'petro-dollar disruption' send speculative capital flooding in. The latest surge ties Bitcoin's price action to unconfirmed reports of Venezuela using crypto to circumvent oil sanctions. It's a powerful geopolitical narrative, perfect for fueling a bull run. It's also dangerously thin.

Decoupling Price from Proof

Where's the blockchain evidence? Large-scale, state-level oil transactions leave traces. Observable on-chain metrics—wallet activity, exchange inflows, stablecoin movements—often fail to support the scale of trading the price rally implies. The rally is driven by sentiment, not settled transactions. It's narrative trading at its most volatile.

The Liquidity Mirage

Thin order books amplify these story-based moves. A burst of retail FOMO, triggered by trending headlines, can create parabolic moves that look like institutional endorsement. It's a liquidity illusion. Real adoption is a grind—infrastructure, regulation, enterprise treasury strategies. It doesn't happen via a single, unverified news flash.

A classic case of the market pricing the headline, not the hash rate. Remember: for every 'digital gold' narrative, there's a hedge fund manager shorting the hype and buying the rumor's eventual collapse.

Why This Bitcoin Theory Is Wrong

Rasmussen’s central point is mechanical: if the rally is being driven by a sudden repricing of monetary policy expectations, it should show up in the probabilities traders are assigning to rate cuts. In his read, it didn’t.

He cited a slight dip in the implied odds of a 25 basis-point cut in January 2026 immediately after the Venezuela headlines. “Probability of a 25bps Rate Cut in Jan’26: Prior to Maduro’s Capture: 16.6%. After Maduro’s Capture: 16.1%,” Rasmussen wrote, adding that “the probability of a 25bps rate cut this month actually fell.”

Even further out, he argued, the change was marginal to nonexistent. “Probability of a 25bps Rate Cut in Dec’26: Prior to Maduro’s Capture: 19.1%. After Maduro’s Capture: 19.2%,” he wrote, framing it as “barely moved.” That’s the mismatch Rasmussen wants investors to notice: a tidy causal story was making the rounds, but the pricing in the instrument closest to that story, rate expectations, was effectively unchanged.

If not a Venezuela-to-Fed chain reaction, what explains the day’s BTC strength? Rasmussen pointed to a cluster of themes that have been building without needing a weekend headline to justify them.

First is institutional demand. Rasmussen argued that the post-2024 spot bitcoin ETF channel continues to widen, with more major platforms beginning to allocate. He cited an example of “+$500m into bitcoin ETFs on Jan. 2nd,” and named Morgan Stanley, Wells Fargo, and Merrill Lynch as part of the distribution wave which have opened their door with the beginning of the year.

Second is the regulatory backdrop. Rasmussen described a “pro-crypto regulatory shift” following the 2024 election, saying crypto markets are beginning to “feel the benefits” as wealth managers, endowments, pensions, and sovereigns get more comfortable adopting bitcoin.

Third is a broader risk-on tone tied to AI. In Rasmussen’s framing, “fears of an AI-bubble are settling,” and investors have been “piling into risk-on assets, like tech stocks and bitcoin.”

Finally, he returned to policy, just not via Venezuela. “Did Maduro’s capture materially change short-term rate cut expectations? No. Does that mean QE is out of the picture. Also no,” Rasmussen wrote, before adding: “QE is just beginning. The market was—and still is—expecting 50bps (or more) rate cuts in 2026.”

Overall, Rasmussen did not argue Venezuela is irrelevant. His conclusion was narrower: “Yes. Somewhat,” he wrote when asked whether the weekend’s events matter for bitcoin, before answering the bigger question whether it’s the main reason for the +5% MOVE with a flat “No. Zoom Out.”

At press time, BTC traded at $93,750.