Bitcoin Declines to Six-Week Low as Global Tensions Rise and Exchange-Traded Fund Outflows Accelerate

Bitcoin Hits Lowest Level in Over Six Weeks Amid US-Iran War Jitters and ETF Outflows

Bitcoin, the largest cryptocurrency, plummeted to its lowest level in more than six weeks as concerns over the escalating US-Iran war and outflows from US exchange-traded funds weighed heavily on the market.

The price of Bitcoin dropped as much as 3.3% to $72,643 in Singapore on Thursday, marking its weakest level since April 13. Meanwhile, the second-largest token Ether fell more than 4% to $1,965, its lowest in almost two months.

The US-Iran war tensions have sent shockwaves through global markets, with stocks and bonds plummeting and oil prices surging. Fresh attacks in the Middle East have dampened optimism for a deal to end the war, raising concerns that it will fuel inflation and trigger interest-rate increases. The US carried out airstrikes on an Iranian military site, and Kuwait reported responding to hostile missile and drone threats.

Read also: Bitcoin Price Sinks 6% Below $66,500 Amid ETF Outflows and Institutional Selling

US spot-Bitcoin ETFs have seen significant outflows, with net withdrawals totaling approximately $1.5 billion so far in May. This has led to a souring of sentiment, with about $873 million of bullish crypto bets unwound in the past 24 hours, with $512 million of those unwound in the last four hours, according to CoinGlass data.

Analysts have attributed the recent downturn to a combination of geopolitical shock and over-leveraged long positioning. A clean break below $70,000 would likely trigger a significant and self-reinforcing wave of stop-losses and liquidations.

The tightening of financial conditions, driven by higher US yields and a firmer dollar, has also contributed to the decline. Additionally, ETF withdrawals and reports of a large block sale of the iShares Bitcoin Trust, the largest Bitcoin ETF, have dented investor confidence, according to Sean McNulty, Asia-Pacific derivatives trading lead at FalconX.