Bitcoin Drops to Two-Month Low as Strategy Sale and Iran Conflict Weigh on Crypto Markets

Bitcoin extended its recent decline on Wednesday, falling to its lowest level in more than two months as investors reacted to a Bitcoin sale by Strategy and growing geopolitical tensions between the United States and Iran.

The world’s largest cryptocurrency briefly dropped to $65,389, its weakest level since late March, before recovering some losses to trade around $66,681 during U.S. trading hours.

Strategy’s Bitcoin Sale Shakes Market Sentiment

A key catalyst behind the latest selloff was a recent disclosure from Strategy, the largest corporate holder of Bitcoin.

The company revealed that it sold 32 Bitcoin between May 26 and May 31 at an average price of $77,135 per coin, generating approximately $2.5 million.

Although the transaction represented only a tiny fraction of Strategy’s overall Bitcoin holdings, investors viewed the sale as a potentially bearish signal for the cryptocurrency market.

The announcement also pressured Strategy shares, which fell to their lowest level in nearly two months following the disclosure.

Citi Says Fundamentals Remain Intact

Despite the market’s negative reaction, analysts at Citi believe the sale does not change Bitcoin’s long-term outlook.

The bank argued that the impact of the transaction has been exaggerated by investors and does not alter the fundamental factors driving the cryptocurrency market.

According to Citi, exchange-traded fund flows remain the most important determinant of Bitcoin’s price performance, accounting for approximately 45% of weekly return variation and serving as a key indicator of new investor adoption.

ETF Outflows Continue to Pressure Bitcoin

While Bitcoin’s long-term fundamentals may remain intact, ETF flows have recently turned negative.

Citi expects investor sentiment to remain subdued as cryptocurrency performance continues to lag behind broader equity markets.

The bank also noted that the absence of major regulatory breakthroughs and reduced concerns about currency debasement have limited investor enthusiasm for digital assets.

Data from SoSoValue showed that Bitcoin ETFs experienced nearly $1 billion in combined outflows on Monday and Tuesday, extending a streak of twelve consecutive days of capital withdrawals.

Over the past three weeks, Bitcoin ETFs have lost more than $3 billion, highlighting weakening institutional demand.

SpaceX IPO and AI Stocks Draw Investor Attention

Additional pressure on the cryptocurrency market is coming from competing investment opportunities.

Market participants are preparing for a highly anticipated SpaceX initial public offering expected to take place next week, which could attract significant liquidity away from digital assets.

At the same time, investors have increasingly shifted their focus toward artificial intelligence-related stocks as optimism surrounding the sector continues to grow.

The strong performance of AI companies has reduced demand for alternative speculative assets, including cryptocurrencies.

Altcoins Follow Bitcoin Lower

The broader cryptocurrency market also moved lower as investors reduced exposure to risk assets.

Ethereum fell 5.7% to $1,862.55, while XRP declined 2.8% to $1.2268.

Other major cryptocurrencies also posted losses. Solana, Cardano, and BNB dropped between 3% and 7%, while popular meme coins faced additional selling pressure.

Dogecoin fell 4.7%, while the TRUMP token declined 3%.

Iran Conflict Adds to Market Uncertainty

Geopolitical concerns remain another major factor weighing on investor sentiment.

The United States and Iran exchanged military strikes for the third time within a week, further increasing fears of a prolonged conflict in the region.

The latest escalation followed reports that Iran had stepped back from indirect negotiations with Washington.

While U.S. officials continue to insist that diplomatic talks remain active and that a potential peace agreement is still possible, reports from Iranian media indicate that no new discussions have taken place this week.

Rising Oil Prices Raise Economic Concerns

The ongoing conflict has pushed oil prices sharply higher, creating additional uncertainty across global financial markets.

Investors remain concerned that sustained increases in energy prices could weaken economic growth, increase inflationary pressures, and reduce risk appetite across both traditional and digital asset markets.

Until geopolitical tensions ease and ETF flows stabilize, Bitcoin and the broader cryptocurrency market may continue to face significant headwinds.