Bitcoin Drops to $61,000 as US-Iran Tensions Escalate Despite ETF Outflow Relief
Bitcoin moved sharply lower on Wednesday, mirroring a broader selloff across risk-sensitive markets after renewed military tensions between the United States and Iran weakened expectations for a diplomatic breakthrough in the Middle East.
The world’s largest cryptocurrency fell 3% to $61,375, erasing most of the gains recorded earlier in the week following additional Bitcoin purchases by corporate holder Strategy Inc.
Geopolitical Tensions Pressure Risk Assets
Bitcoin’s decline came as investors shifted capital away from risk assets and into traditional safe havens, including the U.S. dollar.
Market sentiment deteriorated after Iran launched missile and drone attacks targeting U.S. military bases and other locations across the Middle East. The strikes were reportedly carried out in response to earlier American military actions near the Strait of Hormuz.
The latest escalation follows the downing of a U.S. helicopter earlier this week and has significantly reduced hopes for a near-term peace agreement between Washington and Tehran.
Rising Oil Prices Add to Market Concerns
The renewed conflict triggered a sharp increase in oil prices, raising concerns about higher inflation and the potential impact on global monetary policy.
Investors are now closely monitoring U.S. Consumer Price Index (CPI) data for May, which is expected to provide fresh insight into the Federal Reserve’s interest rate outlook.
Inflation readings for March and April were already boosted by higher energy costs, and analysts expect energy-driven inflationary pressures to remain elevated in May.
Bitcoin ETF Outflows Continue to Ease
Despite the decline in Bitcoin prices, institutional selling pressure showed signs of moderation.
According to data from SoSoValue, spot Bitcoin exchange-traded funds recorded approximately $168 million in net outflows so far this week. While still negative, the figure represents a significant improvement compared to the more than $5 billion in cumulative outflows recorded during the previous three weeks.
The slowing pace of ETF withdrawals suggests that institutional selling may be beginning to stabilize after a prolonged period of market pressure.
Altcoins Follow Bitcoin Lower
The broader cryptocurrency market also traded in negative territory as Bitcoin’s weakness weighed on investor sentiment.
Ethereum, the second-largest cryptocurrency by market capitalization, declined 3.3% to $1,630.
Among other major digital assets, XRP lost 5%, Solana dropped 4.3%, and Cardano fell 5.2%.
Binance Coin (BNB) declined 3%, while meme cryptocurrencies also came under pressure. Dogecoin lost 3.1%, and the TRUMP token retreated 2.3%.
Crypto Market Remains Focused on Macro Developments
With geopolitical tensions rising and inflation concerns returning to the forefront, cryptocurrency traders remain focused on broader macroeconomic developments.
While easing ETF outflows offer some support for Bitcoin, market direction is likely to remain heavily influenced by developments in the Middle East, energy prices, and expectations for future U.S. interest rate decisions.
