Bitcoin dipped slightly on Thursday, settling after a modest recovery in recent sessions, as weak US inflation data helped ease concerns about an imminent interest rate hike, which provided support for the cryptocurrency market.
However, ongoing tensions between the US and Iran, which also triggered a sharp rise in oil prices, have kept cryptocurrency markets largely on the defensive, amid a general decline in risk appetite. A sell-off in chipmakers' stocks has also contributed to this cautious market sentiment.
Bitcoin fell 0.2% to $64,830.40 by 8:21 a.m. The world's largest cryptocurrency had posted weekly gains of about 1.6%, after recovering from its lowest levels this year.
Easing fears of an interest rate hike are supporting Bitcoin, but tensions with Iran continue to weigh on the market.
Bitcoin's recovery coincided with declining market expectations of an imminent interest rate hike by the Federal Reserve, particularly after June's consumer and producer price inflation data came in weaker than expected.
High interest rates negatively affect high-risk, non-yielding assets, such as cryptocurrencies, so a decline in the likelihood of interest rate hikes supports this sector.
But markets remain wary of a potential return of inflationary pressures due to rising energy prices in the coming months, as oil prices continue to climb amid renewed tensions between the United States and Iran. The two sides exchanged fire for the fifth consecutive day, with little sign of a new peace agreement being imminent.
The flow of oil through the Strait of Hormuz also remains disrupted, which supports oil prices and keeps markets on alert for a possible return of inflation, which could push interest rates higher later in the year.
Strategy CEO: Debt risks will only surface if Bitcoin drops to $8,000-$10,000
Strategy Inc (NASDAQ:MSTR) CEO Fong Lei said in an interview with Bloomberg TV on Tuesday that the company remains a long-term investor in Bitcoin, and that the risks associated with its treasury strategy will only become apparent if the price of Bitcoin falls to between $8,000 and $10,000.
He added: My goal is to be the biggest buyer of Bitcoin in the foreseeable future.
His comments came after Strategy, the world’s largest institutional Bitcoin holder, sold more than $215 million worth of cryptocurrency earlier this month, while simultaneously announcing a suspension of any new Bitcoin purchases for nearly a month.
This development has raised concerns about the sustainability of the company’s long-term strategy, especially given its increasing capital and debt obligations issued to finance its Bitcoin purchases.
Although the recent sales represent a limited portion of the company's total holdings, any sustained sell-off by Strategy could put significant pressure on the price of Bitcoin, given the sheer size of its holdings.
Cryptocurrency prices today: Altcoins record limited gains
Other cryptocurrency prices rose slightly, but gains remained limited in the absence of direct positive catalysts.
Ether, the world's second-largest cryptocurrency, rose 2.3% to $1,926.19, while XRP climbed 0.9%.
In contrast, Solana fell by 1.2%, while both Cardano and BNB recorded marginal gains.
The two meme currencies, Dogecoin and $TRUMP, also moved within a narrow range, with changes not exceeding 1%.
