Bitcoin traded within a narrow range on Tuesday, remaining close to its lowest levels of the year as geopolitical tensions and interest rate concerns weakened demand for riskier assets.
The cryptocurrency market faced additional pressure from rising tensions between the United States and Iran. Investors also remained cautious ahead of important US inflation data.
Bitcoin was trading at approximately $62,778 by 01:19 ET, showing little movement during the session.
Iran Conflict Weakens Crypto Market Sentiment
Risk appetite remained subdued as military action between the United States and Iran continued.
The two countries also presented conflicting positions regarding the Strait of Hormuz, one of the world’s most important routes for global energy shipments.
US President Donald Trump said the waterway remained open and that American forces would help protect shipping in the region.
However, he also said the United States would introduce a 20% charge on cargo transported through the Strait of Hormuz.
Military Strikes Raise Oil Supply Concerns
Trump’s comments followed a third consecutive day of US attacks on Iran.
Tehran responded by targeting ships in the Strait of Hormuz and launching strikes against US military facilities across the Middle East.
The escalation pushed oil prices sharply higher as traders assessed the possibility of disruptions to global crude supplies.
Higher energy prices could increase transportation and production costs, adding further pressure to inflation.
Inflation and Interest Rate Fears Pressure Bitcoin
Concerns about stronger inflation have also raised the possibility that the Federal Reserve could increase interest rates.
Federal Reserve Governor Christopher Waller indicated that a rate hike may become necessary if inflationary pressures continue to rise.
His comments came ahead of the release of the US Consumer Price Index report for June, which investors were closely monitoring for new signals about monetary policy.
Higher interest rates are generally negative for speculative and non-yielding assets such as Bitcoin. Investors may instead prefer cash, government bonds and other assets that offer more attractive returns.
Bitcoin ETF Outflows Accelerate
Spot Bitcoin exchange-traded funds continued to experience heavy withdrawals, adding further selling pressure to the cryptocurrency.
Bitcoin ETFs recorded approximately $424.7 million in net outflows on Monday, according to data from SoSoValue.
The funds had also suffered withdrawals during eight of the previous nine weeks.
The continued outflows suggest that institutional investors remain cautious toward Bitcoin following two consecutive months of weaker demand.
Strategy Raises $466.7 Million but Buys No Bitcoin
Strategy Inc., one of the world’s largest corporate Bitcoin holders, disclosed that it raised around $466.7 million by selling Class A common shares between July 6 and July 12.
However, the company did not purchase any additional Bitcoin during that period.
Strategy had previously sold 2,225 Bitcoin at the beginning of July and reportedly began reducing some of its holdings in June.
The sales were linked to growing dividend obligations and debt repayment commitments.
Strategy’s Bitcoin Model Faces Questions
Strategy funded much of its Bitcoin accumulation through debt issuance and preferred stock sales.
However, this approach has created significant financial obligations, including dividend payments and future debt repayments.
Some investors have questioned whether the company’s long-term Bitcoin strategy remains sustainable if the cryptocurrency fails to resume its upward trend.
Bitcoin was trading around 50% below the record high it reached in October, increasing concerns about the company’s exposure to further price weakness.
Altcoins Show Limited Movement
The wider cryptocurrency market also remained relatively quiet as investors found few positive catalysts.
Ether, the world’s second-largest cryptocurrency, gained approximately 0.5% to trade near $1,791.
XRP fell around 0.4% to $1.0717, while BNB gained approximately 0.4%.
Cardano declined by 0.4%, while Solana dropped around 1.3%.
Among major memecoins, Dogecoin remained largely unchanged, while the TRUMP token fell approximately 0.7%.
US CPI Could Determine Bitcoin’s Next Move
Investors are now focused on the latest US inflation figures.
A stronger-than-expected CPI reading could increase expectations for higher interest rates and place additional pressure on Bitcoin and other cryptocurrencies.
However, weaker inflation data could ease rate concerns and potentially improve market sentiment toward risk assets.
