Bitcoin fell sharply on Tuesday, extending its retreat from the weekend recovery as concerns about higher US interest rates and continued institutional selling weighed on the cryptocurrency market.
Fading optimism surrounding US-Iran peace negotiations also weakened risk appetite as investors waited for further progress toward a broader agreement.
Bitcoin dropped 3.8% to approximately $62,510 by 10:03 ET.
Federal Reserve Rate Fears Pressure Bitcoin
Cryptocurrency markets remained under pressure following hawkish signals from the Federal Reserve’s latest policy meeting.
A majority of policymakers appeared open to raising interest rates later this year, prompting investors to reassess the outlook for US monetary policy.
Higher interest rates often create a difficult environment for Bitcoin and other cryptocurrencies. Unlike bonds and savings products, digital assets do not generate interest income.
As yields rise, investors may therefore reduce exposure to speculative assets and move capital toward lower-risk investments.
Bitcoin ETF Outflows Continue
Institutional investors continued withdrawing money from US spot Bitcoin exchange-traded funds.
The sector has now experienced six consecutive weeks of significant selling. Investors removed nearly $160 million from spot Bitcoin ETFs during the opening part of this week, according to SoSoValue data.
Although the pace of withdrawals has slowed recently, the continued outflows suggest that institutional demand for Bitcoin remains fragile.
Persistent ETF selling has also reduced one of the main sources of buying support that helped drive previous Bitcoin rallies.
US Retail Demand Remains Weak
Bitcoin received little support from retail investors in the United States.
The Coinbase Premium Index showed that Bitcoin continued to trade at a notable discount on Coinbase compared with major international exchanges.
Coinbase is the largest cryptocurrency exchange in the United States. A negative premium usually indicates weaker buying demand among US investors.
The trend suggests that retail traders remain cautious following the severe cryptocurrency selloff earlier this year.
Altcoins Fall Alongside Bitcoin
The broader cryptocurrency market followed Bitcoin lower as traders reduced their exposure to risk.
Ether, the second-largest cryptocurrency by market value, fell 5.2% to approximately $1,664.
XRP declined around 3.3%, while Solana, Cardano and BNB recorded losses ranging from 3% to 6%.
Memecoins also experienced heavy selling. Dogecoin dropped 5.2%, while the TRUMP token fell approximately 8.3%.
The widespread losses showed that selling pressure was not limited to Bitcoin.
US Economic Data Comes Into Focus
Investors are now turning their attention to several important US economic reports.
June purchasing managers’ index data are scheduled for release on Tuesday. The figures will provide fresh information about economic activity across the manufacturing and services sectors.
The May Personal Consumption Expenditures price index is due on Wednesday.
The PCE index is the Federal Reserve’s preferred inflation measure and will be closely examined for signs of persistent price pressure.
Stronger-than-expected inflation could reinforce expectations for higher interest rates and place additional pressure on Bitcoin prices.
However, weaker data could ease concerns about further monetary tightening and provide some relief for the cryptocurrency market.
