Bitcoin fell in Asia on Monday as oil prices surged after the United States launched fresh attacks on Iran, reviving inflation fears.
The major cryptocurrency fell as much as 2.6% to $62,478 at 9:00 AM London time.
This decline pushed Bitcoin back below its 200-week moving average, a technical level that could signal a prolonged bear market. Meanwhile, Ethereum, the second-largest cryptocurrency, fell by 2.6%.
Richard Galvin, CEO of cryptocurrency investment firm DACM, said: “The sell-off follows weak trading in US stock futures and rising oil prices driven by escalating tensions with Iran.”
Fears of a return to inflation and an interest rate hike
Renewed hostilities between the United States and Iran have increased fears that rising oil prices could reignite inflation and push interest rates higher.
Investors will be closely watching U.S. consumer price data and Federal Reserve Chairman Kevin Warsh's testimony this week for clues about the outlook for the U.S. central bank's policy.
Tony Sycamore, an analyst at IG Australia, said: “A higher-than-expected CPI reading is likely to reinforce expectations that the Federal Reserve will raise interest rates before the end of the year, which will put pressure on Bitcoin.” He added that a reading in line with or below expectations would support Warsh’s earlier statements that inflationary pressures are easing.
Military tensions escalate in the region
The United States launched fresh missile attacks on Iran on Sunday, in what has become a recurring pattern of strikes and counter-strikes between Washington and Tehran, as the two sides issued conflicting statements about whether the Strait of Hormuz was open to shipping.
Brent crude rose 4.4% to above $79 a barrel, as escalating tensions fueled concerns about potential supply disruptions. Meanwhile, U.S.-listed Bitcoin spot exchange-traded funds (ETFs) attracted inflows of $197.4 million last week, marking their first positive weekly performance in nine weeks.
