Bitcoin Edges Lower as U.S.-Iran Tensions Weigh on Risk Assets

Bitcoin Dips Amid Geopolitical Escalation and ETF Outflows Slow

Bitcoin slipped 0.3% to $61,589.3 by 17:10 ET (21:10 GMT) on Wednesday, surrendering most of a short-lived rebound seen earlier in the week after top corporate holder Strategy increased its Bitcoin holdings. The move came as broader risk assets, particularly equities, declined while investors shifted into the U.S. dollar and other safe-haven instruments.

Market sentiment was pressured by heightened tensions between Washington and Tehran. The U.S. military launched “self-defense” strikes against Iran following the downing of an American helicopter over the Strait of Hormuz, an incident for which Iran has not claimed responsibility. President Donald Trump stated that Iran had taken too long to negotiate a peace deal and “will have to pay the price,” adding that a joint U.S.-Israeli campaign had significantly weakened Iran’s military.

Trump said the U.S. had “hit them hard yesterday and we’re going to hit them again hard today,” while reiterating that Iran “very simply cannot have a nuclear weapon.” Against this backdrop, oil prices advanced on Wednesday.

Bitcoin’s decline was tempered by indications that institutional selling pressure may be easing. Data from SoSoValue showed spot Bitcoin ETFs recorded $168 million in outflows so far this week, compared with more than $5 billion in outflows over the prior three weeks that had weighed on crypto markets.

Inflation Data Supports Fed Pause as Altcoins Follow Bitcoin Lower

U.S. consumer price index data for May aligned with forecasts and supported market expectations that the Federal Reserve will leave interest rates unchanged at next week’s meeting. Headline CPI rose 4.2% year-on-year, up from 3.8% in April, while prices increased 0.5% month-on-month, slightly below April’s 0.6% gain.

Core CPI, excluding food and energy, increased 0.2% month-on-month, under the 0.3% consensus and down from 0.4% in April. On an annual basis, core CPI rose 2.9%, in line with expectations and slightly above 2.8% in the prior month. Over 60% of the annual headline increase was attributed to energy, with energy prices up 23.5% year-on-year and gasoline surging 40.5%, the highest readings since 2022. Core goods prices slipped 0.1% on a monthly basis.

The relatively contained core inflation prompted traders to modestly scale back expectations for further rate hikes this year and to slightly increase the implied probability of a quarter-point rate cut, according to the CME FedWatch tool.

Broader crypto markets tracked Bitcoin lower. Ether, the second-largest cryptocurrency, fell 1.9% to $1,618.30. XRP dropped 3.9%, Solana declined 3.4%, and Cardano slid 4.1%. Among memecoins, Dogecoin lost 2.9%, while $TRUMP edged down 1.8%.

FAQ

Why did Bitcoin fall on Wednesday?
Bitcoin declined 0.3% to $61,589.3 amid a broader risk-off move driven by escalating U.S.-Iran tensions, although losses were limited by signs of cooling outflows from spot Bitcoin ETFs.

How are spot Bitcoin ETFs affecting the market?
Spot Bitcoin ETFs saw $168 million in outflows so far this week, a notable slowdown compared with over $5 billion in outflows over the past three weeks that had previously pressured crypto prices.

What did the latest U.S. inflation data show?
May headline CPI rose 4.2% year-on-year and 0.5% month-on-month, in line with expectations, while core CPI increased 2.9% annually and 0.2% monthly, reinforcing expectations that the Federal Reserve will hold rates steady at its next meeting.

How did major altcoins perform?
Altcoins mostly followed Bitcoin lower: Ether fell 1.9% to $1,618.30, XRP dropped 3.9%, Solana lost 3.4%, Cardano slipped 4.1%, Dogecoin declined 2.9%, and $TRUMP eased 1.8%.