Bitcoin Falls Over 2% as U.S.-Iran Tensions, Hawkish Fed Minutes Weigh on Risk Assets

Bitcoin fell more than 2% on Wednesday, retreating from earlier weekly highs as a sharp escalation in geopolitical tensions and hawkish signals from the U.S. Federal Reserve dampened investor appetite for risk assets. The world's largest cryptocurrency was last trading down 2.1% at $62,115.3, according to Investing.com data, after briefly trading above $64,600 earlier in the week.

Geopolitical Tensions Fuel Risk-Off Sentiment

Market sentiment soured following military exchanges between the United States and Iran. The U.S. military launched strikes on Tuesday against Iran in what it called a retaliation for attacks on three commercial oil tankers near the Strait of Hormuz. Iran responded with strikes of its own, prompting U.S. President Donald Trump to state that a ceasefire was now "over."

President Trump's comments, made at a NATO summit, included warnings that the U.S. may reimpose a naval blockade on Iran and that further strikes were likely. The geopolitical instability sent shockwaves through commodity markets, with Brent crude futures, the global oil benchmark, briefly surging above $80 a barrel for the first time since late June. Such events typically cause investors to sell speculative assets like cryptocurrencies in favor of traditional safe havens.

Hawkish Fed Minutes Add to Headwinds

Adding to the pressure on crypto prices, minutes from the Federal Reserve’s June 16-17 meeting revealed a deeply divided committee concerned about persistent inflation. The minutes showed that while most policymakers saw scenarios where inflation would cool on its own, they also acknowledged risks that it could remain elevated due to energy shocks from the Middle East conflict and strong AI-related demand.

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In such scenarios, the minutes stated that "almost all of these participants indicated that some policy firming would likely be warranted." A few participants even made a case for raising interest rates at the June meeting. A higher interest rate environment increases the opportunity cost of holding non-yielding assets like Bitcoin, making them less attractive to investors.

Broader Crypto Market Declines

Most major alternative cryptocurrencies, or altcoins, tracked Bitcoin's decline on Wednesday. The sell-off was widespread across the digital asset market:

• Ethereum (ETH): Down 2.1% to $1,735.98
• XRP (XRP): Down 2.2% to $1.0888
• Solana (SOL) and Cardano (ADA): Both down approximately 4.5%

Despite the price drop, institutional demand showed some resilience. Citing data from SoSoValue, U.S.-listed spot Bitcoin ETFs recorded a third consecutive day of net inflows on Tuesday. These flows have helped offset a recent period of heavy withdrawals, though weekly flows remained negative overall.