Bitcoin’s drop this week is primarily driven by macroeconomic risk-off conditions resulting from the geopolitics, involving the Middle East war, Andri Fauzan Adziima, research lead at cryptocurrency exchange Bitrue, told Decrypt.
The ripple effects of this war have raised oil prices, leading to fears of sticky inflation. Though Bitcoin continues to outperform gold and the U.S. stock market since the war began on February 28, it dropped over 6% from over $75,000 to below $70,000 as the U.S. Federal Reserve kept the interest rates steady last week.
“Like all other macro assets, Bitcoin is trading to geopolitical headlines,” Thahbib Rahman, research analyst at crypto research platform Block Scholes, told Decrypt. “Trump’s uncertain tone yesterday around the likelihood of a ceasefire coincided with Bitcoin falling to $67,000.”
In addition to geopolitical pressure, 10-year U.S. Treasury yields rose for four consecutive weeks in response to the confusing mixed messages around the U.S.-Iran war.
The U.S. dollar index rose 0.57% this week to 100.148, continuing to weigh down on risk assets, including Bitcoin.
Experts continue to expect heightened volatility and a potential choppy price action in the near term, with a potential relief rally in the mid-term, contingent on easing macro and geopolitical pressures.
“Thin weekend volume raises odds of a quick liquidity sweep lower toward $67,000 to $68,000 support first,” Adziima explained.
