Hassan Maishera
TL;DR
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Bitcoin fell below $77,000 on Sunday night as markets reacted to Trump’s latest threat to Iran on Truth Social.
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Concerns about high oil prices potentially fueling inflation to the point where the Fed may raise interest rates are also affecting the market.
Bitcoin slipped below the $77,000 mark on Sunday night as renewed geopolitical tensions between the United States and Iran, alongside mounting inflation concerns, triggered a broader wave of risk aversion across global markets.
Bitcoin is trading above $76,700 at press time on Monday, down 1.2% in the last 24 hours.
The decline follows a strong rally earlier in the week that pushed Bitcoin close to $82,000, fueled by robust inflows into spot Bitcoin exchange-traded funds and optimism surrounding the U.S. Digital Asset Market Clarity Act.
However, sentiment has since weakened, with Bitcoin’s Fear & Greed Index dropping to 27, back near “fear” territory after hovering in a neutral range between 40 and 50 days earlier.
Treasury Yields, Dollar Strength, and Geopolitical Pressure Crypto Markets
Andri Fauzan Adziima, research lead at Bitrue Research Institute, attributed the downturn to a combination of macroeconomic and geopolitical pressures.
While speaking to The Block, the analyst said,
“Key culprits are surging Treasury yields hitting 12-month highs, a stronger dollar, and geopolitical escalation.”
Earlier on Sunday, U.S. President Donald Trump issued a warning to Iran on Truth Social, stating that further delays in reaching a peace agreement could prompt military action from the U.S.
“They better get moving, FAST, or there won’t be anything left of them,” Trump wrote.
The escalating tensions boosted oil prices sharply, with Brent crude rising 1.78% to $111.2 per barrel while WTI crude gained 2.2% to $107.7.
Inflation Fears Weaken ETF Demand
Market participants are increasingly concerned that elevated oil prices could prolong inflationary pressures and potentially force the Federal Reserve to maintain higher interest rates for longer.
BTSE COO Jeff Mei said investors fear persistent inflation could prompt the Fed to tighten monetary policy further. The inflation outlook has already sparked a significant sell-off in government bonds, according to a CNBC report published Saturday.
Crypto investment flows have also started to weaken. Data from SoSoValue showed Bitcoin ETFs recorded net outflows of $1 billion during the week ending May 17, snapping a six-week inflow streak.
“ETF outflows last week likely reflect institutional investors reducing short-term exposure as expectations for Fed rate cuts continue to be pushed back, and portfolio managers rotate toward cash or defensive positioning,” said Min Jung, associate researcher at Presto Research.
Despite the near-term volatility, analysts believe Bitcoin’s broader bullish structure remains intact.
Jung said Bitcoin is likely to remain closely tied to macroeconomic developments in the coming week, particularly U.S. inflation data and Treasury yield movements. He added that progress on the Clarity Act could help restore confidence in the crypto market.
