Bitcoin declined on Wednesday, mirroring weakness across broader risk-sensitive markets after renewed military tensions between the United States and Iran reduced expectations of a potential Middle East peace agreement.
The world’s largest cryptocurrency dropped 0.28 percent to $61,510 as of 8:09 GMT, erasing most of the gains from a short-lived recovery earlier in the week that was supported by additional Bitcoin purchases from corporate holder Strategy Inc.
Bitcoin ETFs record $168 million net outflows
Bitcoin extended its decline despite indications that institutional selling pressure may be easing, following three consecutive weeks of significant outflows from spot Bitcoin exchange-traded funds.
According to data from SoSoValue, spot Bitcoin ETFs have recorded net outflows of $168 million so far this week, a marked slowdown from the more than $5 billion withdrawn over the previous three weeks, which had weighed heavily on cryptocurrency markets.
Investors shift away from risk-sensitive assets
Bitcoin’s fall came amid a broader selloff in risk-sensitive assets, particularly equities, as investors shifted toward the U.S. dollar and other traditional safe-haven investments.
Iran launched missile and drone strikes targeting U.S. military bases and other sites across the Middle East in response to earlier American attacks near the Strait of Hormuz. The escalation followed the downing of a U.S. helicopter in the Hormuz area earlier this week, further intensifying tensions between the two countries.
The latest exchange of attacks dealt another blow to expectations of a diplomatic breakthrough between Washington and Tehran, despite repeated assurances from U.S. officials that an agreement was within reach.
Meanwhile, oil prices jumped following the renewed hostilities, heightening concerns about the conflict’s potential impact on inflation and the outlook for global interest rates.
Investors are awaiting the release of U.S. consumer price index (CPI) data for May later on Wednesday for further clues on the Federal Reserve’s interest-rate trajectory. Inflation readings for March and April pointed to a sharp increase in price pressures, largely driven by higher energy costs, a trend that is expected to persist in May.
Ether falls to $1,636.87
The broader cryptocurrency market also moved lower in line with Bitcoin’s decline. The world’s second-largest cryptocurrency, Ether, fell 2.3 percent to $1,636.87.
Among major altcoins, XRP dropped 4.70 percent to $1.1131, while Solana lost 3.73 percent to $64.116 and Cardano declined 4.75 percent.
In the memecoin segment, Dogecoin slipped 2.27 percent, while $TRUMP lost 2.10 percent.
