Bitcoin tumbled more than 3% in Asian trading, sliding toward $62,000 after briefly holding above $64,000, as renewed geopolitical tensions between the U.S. and Iran rattled risk sentiment across financial markets.
The sell-off was triggered by fresh U.S. military strikes on Iran, which sent oil prices sharply higher and reignited concerns about a resurgence in inflation. Rising energy costs feed directly into broader price pressures, complicating the Federal Reserve’s policy outlook and dimming prospects for near-term interest rate cuts.
“When energy gets pricier, markets start worrying central banks may need to keep interest rates higher for longer,” analysts noted. “That’s usually bad news for speculative assets like Bitcoin.”
BTC, which offers no cash flow or yield, becomes less attractive when safer assets begin offering better returns. As a result, investors are rotating out of high-risk positions and into more defensive holdings.
Crude oil surged following the strikes, raising fears of supply disruptions. Higher oil prices increase transportation, manufacturing, and operational costs across the economy—fueling inflation expectations and forcing central banks to consider prolonged monetary tightening.
Markets are now closely watching this week’s U.S. Consumer Price Index (CPI) report and testimony from former Fed official Kevin Warsh. A hotter-than-expected inflation reading could strengthen the case for another rate hike before year-end, further pressuring liquidity-sensitive assets like cryptocurrencies.
Despite the short-term volatility, there are signs of underlying support: U.S.-listed spot Bitcoin ETFs recorded approximately $200 million in net inflows last week—the first positive weekly flow in nine weeks—suggesting long-term buyers remain engaged even as traders retreat to the sidelines.