Trump’s Iran Stance Causes Bitcoin 2% Dip | Crypto News
- Bitcoin tumbled on Thursday, falling as much as 3.6% to $65,709, as renewed geopolitical tensions and comments from US President Donald Trump rattled markets.
- Trump’s pledge to continue the war with Iran, and his indication of harder strikes in the coming weeks, triggered the downturn, according to market analysts.
- The cryptocurrency’s decline is largely attributed to its increasing correlation with the stock market, particularly the Nasdaq.
Bitcoin tumbled on Thursday, falling as much as 3.6% to $65,709, as renewed geopolitical tensions and comments from US President Donald Trump rattled markets. The decline mirrors a broader selloff in risk assets, including stocks, fueled by concerns over escalating conflict in the Middle East and its potential impact on oil prices and inflation.
Trump’s pledge to continue the war with Iran, and his indication of harder strikes in the coming weeks, triggered the downturn, according to market analysts. The prospect of continued disruption to the Strait of Hormuz, a critical global oil transit route, is driving up crude prices and reigniting fears of persistent inflation.
Bitcoin Follows Stock Market Downturn
The cryptocurrency’s decline is largely attributed to its increasing correlation with the stock market, particularly the Nasdaq. Nasdaq futures are pointing to a 1.5% lower open, indicating broader risk aversion. “Bitcoin is largely following stocks’ direction, though in the past few weeks it has showed reduced sensitivity to both good and bad news,” noted Caroline Mauron, co-founder of Orbit Markets, in a Bloomberg report.
Ether also experienced significant losses, falling as much as 5.9%, while Solana dropped by a similar magnitude. This broad-based decline suggests a widespread pullback from cryptocurrencies as investors seek safer assets amid heightened uncertainty.
Oil Prices Surge, Fueling Inflation Concerns
US benchmark WTI crude oil surged to more than $111 a barrel, further exacerbating inflationary pressures. According to FXStreet, oil jumped more than 5% to $106 per barrel following Trump’s comments. Rising oil prices are expected to push Treasury yields higher as investors reassess the Federal Reserve’s monetary policy path.
The 10-year US Treasury yield has risen to 4.37%, reflecting concerns that the Fed may need to maintain higher interest rates for longer to combat inflation. Higher yields, in turn, strengthen the US dollar and reduce the appeal of non-yielding assets like Bitcoin and gold.
Bitcoin’s Resilience Tested
Despite the recent downturn, Bitcoin has demonstrated some resilience in recent months. It ended March up 2% from the previous month, snapping a five-month losing streak. However, the current macro environment presents a significant headwind for the cryptocurrency.
“Trump’s latest comments on the war with Iran triggered a sharp selloff amid a lack of de-escalation signs,” said Alex Kuptsikevich, chief market analyst at FxPro. “Bitcoin is largely consolidating at a range between $66,000 and $69,000.”
Despite March’s gains, Bitcoin remains down 45% from its peak of $126,000 in October. Apparent demand, which measures the extent to which demand compares with new Bitcoin being mined, was negative by about 63,000 tokens as of late March, according to a report from CryptoQuant.
Gold’s Performance Contrasts with Bitcoin
Interestingly, gold, traditionally considered a safe-haven asset, ended March down more than 11% as concerns about energy-fueled inflation grew. This divergence suggests that investors are currently favoring other assets or are hesitant to allocate capital to traditional safe havens in the face of rising inflation expectations.
The current situation highlights the complex interplay between geopolitical events, macroeconomic factors, and cryptocurrency markets. While Bitcoin had previously weathered the conflict in the Middle East better than many assets, the latest developments suggest that it is increasingly susceptible to broader market sentiment and macroeconomic pressures.