Bitcoin fell beneath $77,000 on Tuesday as investors reacted to renewed U.S. military activity in Iran and weakening demand for exchange-traded products that had supported the market earlier in the quarter.
The cryptocurrency last traded 0.6% lower at $76,946.7 by 02:43 ET (06:43 GMT), after having climbed near $78,000 in the prior session.
Geopolitical developments push flows to safe havens
Reports said the U.S. military carried out new strikes in southern Iran on Monday targeting missile launch sites and mine-laying boats. U.S. officials described the strikes as "defensive" and said they did not signal an end to any ceasefire. The operations followed comments from U.S. President Donald Trump, who said on Monday that talks with Iran were "proceeding nicely."
The return of geopolitical uncertainty sent some investors toward traditional safe-haven assets such as the dollar and gold, while pressuring equities and cryptocurrencies. In Asian trade, oil prices rebounded nearly 2%, a move that can leave inflation concerns elevated and affect risk sentiment.
ETF flows and macro backdrop weigh on crypto outlook
Spot bitcoin ETFs - a key source of institutional buying that has supported bitcoin this year - showed signs of cooling. U.S. spot bitcoin ETFs recently recorded net outflows after a period of robust institutional purchases earlier this quarter.
Analysts also pointed to elevated Treasury yields and persistent inflation worries as headwinds for cryptocurrencies. Those dynamics have caused traders to pare back expectations for near-term Federal Reserve rate cuts, further constraining demand for higher-risk assets.
Market participants will be watching U.S. inflation data later this week, with the personal consumption expenditures (PCE) price index - the Fed's preferred inflation gauge - due on Thursday for additional clues about the central bank's path.
Altcoins mostly lower amid risk-off mood
Most alternative tokens extended losses on Tuesday as the cautious tone spread across digital assets. Ethereum, the world’s second-largest cryptocurrency by market value, lost 0.3% to $2,101.75. XRP fell 0.7% to $1.35. Solana eased 1.4% and Cardano dipped 0.7%, while Polygon bucked the trend and rose 1.4%. Among meme tokens, Dogecoin slipped 1.3%.
The price moves reflected a market oscillating between optimism about a potential diplomatic breakthrough and fears of escalation in the region, with traders repeatedly swinging between these sentiments over recent weeks.
Caleb Monroe