Key Takeaways

• Bitcoin falls 3%: The world’s largest crypto dropped to $61,375.5, wiping out most of the week’s brief rebound.
• Strategy’s $101M buyback bounce reversed: The recovery sparked by top corporate holder Strategy’s purchase has been erased.
• Iran retaliates: Tehran launched missile and drone attacks on U.S. military bases and multiple Middle East targets in response to American strikes near Hormuz.
• Helicopter shoot-down the trigger: The chain of escalation began with Iran downing a U.S. helicopter in the Strait of Hormuz.
• Peace deal hopes shattered: Wednesday’s strikes further undermined claims from U.S. officials that an agreement was close.
• Oil surges: Crude’s rally is keeping markets on edge over inflation and its interest rate implications.
• CPI data due today: May readings expected to show continued energy-driven inflation acceleration following sharp increases in March and April.
• ETF outflows cooling: Only $168 million in outflows so far this week — a dramatic slowdown from over $5 billion in the prior three weeks.
• Altcoins hit hard: Ether fell 3.3% to $1,630.78, XRP dropped 5%, Solana shed 4.3%, Cardano lost 5.2%, BNB fell 3%.
• Memecoins decline: Dogecoin fell 3.1%; $TRUMP shed 2.3%.

Bitcoin fell on Wednesday, tracking a broader decline in risk-driven markets as fresh military action between the United States and Iran dampened hopes for a peace deal in the Middle East.

Losses came even as institutional selling showed some signs of cooling after three straight weeks of heavy outflows from spot exchange-traded funds.

Bitcoin fell 3% to $61,375.5 by 02:12 ET (06:12 GMT). The world’s largest crypto wiped out most of a brief rebound seen earlier this week after top corporate holder Strategy Inc bought more of the coin.

Bitcoin Spooked by U.S.-Iran Escalation

Losses in Bitcoin came amid a broader rout in risk-driven assets — particularly equities — as investors pivoted into the dollar and other safe havens.

Iran launched missile and drone attacks on U.S. military bases and several other targets in the Middle East, retaliating for earlier American attacks near the Strait of Hormuz.

The renewed hostilities stemmed from the downing of a U.S. helicopter in Hormuz earlier this week.

Wednesday’s attacks further undermined hopes for a U.S.-Iran peace deal, despite repeated claims from U.S. officials that an agreement was close.

Oil prices surged after the latest hostilities, keeping markets on edge over the inflationary impact of the war and its effect on interest rates.

U.S. consumer price index inflation data for May — due later in the day — is expected to provide more cues on the path of U.S. interest rates. Readings for March and April both showed a sharp energy-driven increase in inflation, a trend expected to continue in May.

ETF Outflows Cool, Providing Some Relief

Cooling capital outflows from spot ETFs lent Bitcoin some limited relief. Data from SoSoValue showed a total of $168 million in outflows so far this week — a dramatic slowdown after over $5 billion in outflows over the past three weeks battered crypto markets.

Crypto Price Today: Altcoin Recovery Falters

Broader crypto prices largely fell tracking Bitcoin. Ether, the world’s second-largest cryptocurrency, fell 3.3% to $1,630.78.

XRP fell 5%, Solana shed 4.3%, while Cardano fell 5.2%.

Binance’s BNB fell 3%.

Among memecoins, Dogecoin fell 3.1%, while $TRUMP shed 2.3%.