Market risk appetite has been dealt a blow following renewed military strikes between the United States and Iran and the latest comments from U.S. President Donald Trump, which have reignited concerns over geopolitical instability.
This has triggered a significant decline in Bitcoin, which was down over 2% at the time of writing, falling below the $62,000 mark.
Other major cryptocurrencies, including Ethereum and Solana, also moved lower in tandem.
Global equity markets extended their losses, with most Asian indices trading down on Wednesday and U.S. stock futures pointing to a lower open for the major benchmarks.
Gold futures also declined by more than 2%.
The latest escalation began on July 7th when the U.S. Central Command announced it had completed a new round of offensive strikes against Iran, stating it used "precision-guided munitions to hit over 80 targets" in direct response to recent Iranian attacks on commercial vessels transiting the Strait of Hormuz.
The U.S. military said the strikes targeted Iranian air defense systems, command and control networks, coastal radar sites, and anti-ship missile capabilities, and also destroyed more than 60 small Islamic Revolutionary Guard Corps vessels in and around the Strait of Hormuz.
The U.S. cited prior Iranian attacks on three commercial ships as the provocation.
The U.S. Central Command stated its forces remain on high alert and are prepared to hold Iran accountable for any non-compliance.
On July 8th, Iran's Islamic Revolutionary Guard Corps issued a statement declaring that U.S. airstrikes early that day on coastal areas and non-military facilities in Iran's Hormozgan province violated the ceasefire and the Islamabad Memorandum of Understanding.
The IRGC claimed it struck 85 U.S. targets in Bahrain and Kuwait in retaliation for the U.S. breach of the truce.
Senior Iranian military advisor Yahya Rahim Safavi stated that the U.S. is prepared to launch further attacks, but Iran is fully ready to respond.
Iran's armed forces headquarters issued a statement vowing a decisive response to the U.S. strikes and reaffirmed that U.S. interference in the management of the Strait of Hormuz would not be tolerated under any circumstances.
Further fueling tensions, President Trump stated at a NATO summit on July 8th that he believes the U.S.-Iran memorandum of understanding "is over," telling reporters he would inform U.S. negotiators and that he no longer wishes to deal with Iran.
The renewed hostilities and Trump's comments propelled oil prices sharply higher.
At the time of writing, Brent crude futures had surged nearly 6% to $78.54 per barrel.
Caroline Mauron, co-founder of Orbit Markets, commented: "Bitcoin sold off swiftly following Trump's remarks, as markets worry that rising energy prices could spark a new wave of inflation and potentially force central banks to hike rates further in response. We expect some support for Bitcoin around the $61,500 level, but markets are likely to remain highly volatile as the geopolitical and macroeconomic landscape continues to evolve."
After suffering a nearly 18% plunge in June, its worst monthly performance in four years, Bitcoin's performance had shown some improvement in July, largely shrugging off news earlier this week of a Bitcoin sale by MicroStrategy.
The cryptocurrency market remained relatively stable on Monday after the world's largest corporate Bitcoin holder disclosed it had sold $216 million worth of Bitcoin.
The market's muted reaction contrasted sharply with last month, when MicroStrategy's disclosure of its first Bitcoin sale since 2022 triggered a notable sell-off across crypto markets.
Prior to the latest Middle East escalation, some large Bitcoin holders had resumed accumulating the asset.
U.S.-listed spot Bitcoin exchange-traded funds (ETFs) have recorded net inflows for three consecutive trading sessions, with cumulative inflows exceeding $500 million.
This marks a reversal from June, when investors withdrew a net total of over $4.5 billion from these funds, the largest monthly outflow since their launch in early 2024.
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