Bitcoin (BTC) continued its downward trajectory on Thursday, slipping below the $65,800 mark as escalating geopolitical tensions in the Middle East and a surge in crude oil prices weighed on investor sentiment. The leading cryptocurrency, which had briefly rallied to a monthly high above $66,000 earlier in the week, has now reversed those gains, raising questions about whether a more pronounced correction is underway.
Geopolitical Risks and Inflation Concerns
The latest leg lower comes amid heightened conflict between the United States and Iran. Reports of fresh US military strikes on Iranian infrastructure, coupled with Iranian attacks on oil tankers in the Strait of Hormuz and the Red Sea, have stoked fears of supply disruptions in global energy markets. In response, crude oil prices have climbed sharply, reigniting concerns that inflation may remain stubbornly elevated.
This inflationary pressure has prompted traders to reassess the Federal Reserve's monetary policy trajectory. According to the CME FedWatch Tool, the probability of a July interest rate hike has risen notably in recent days. Higher interest rates typically reduce the appeal of risk-sensitive assets like cryptocurrencies, as they increase the attractiveness of fixed-income investments and tighten financial conditions.
Institutional Demand Remains Resilient
Despite the near-term headwinds, institutional interest in Bitcoin has shown signs of resilience. Data from SoSoValue indicates that US-listed spot Bitcoin ETFs recorded $68.99 million in net inflows on Wednesday, marking seven consecutive days of positive flows. This sustained accumulation suggests that long-term confidence among institutional investors remains intact, even as short-term macroeconomic uncertainty pressures prices.
If ETF inflows persist, they could provide a buffer against further downside. However, the broader market remains cautious, with many traders watching for signs of a deeper correction. For context, similar geopolitical shocks have previously triggered sharp but temporary pullbacks in crypto markets, as seen in the Bitcoin Dips Below $63K as Iran Tensions and $120K BTC ETF Outflows Pressure Price.
Technical Analysis: Key Levels in Focus
Bitcoin is currently trading near $65,800, hovering just above its 50-day exponential moving average (EMA) at approximately $65,163. Holding above this level suggests that buyers remain active, but the broader recovery is capped by stronger resistance overhead.
Immediate resistance lies at the 100-day EMA around $68,063, with the 200-day EMA at $74,348 representing a more significant barrier. A decisive break above the 100-day EMA could reignite bullish momentum, but failure to do so may leave BTC vulnerable to further losses.
On the downside, traders are closely monitoring the $64,004 support zone. A sustained break below this level could trigger a deeper corrective move, potentially accelerating selling pressure. The Relative Strength Index (RSI) currently sits near 52, above the neutral 50 threshold, indicating that bears have not yet seized full control. Meanwhile, the Moving Average Convergence Divergence (MACD) remains in positive territory, suggesting that some upward momentum persists, albeit constrained by the broader bearish resistance structure.
Broader Market Context
The current correction in Bitcoin is part of a wider risk-off sentiment affecting global markets. Rising oil prices and geopolitical uncertainty have also weighed on other assets, including equities and commodities. For instance, the FTSE 100 Slips 0.5% as Oil Above $90 and UK Political Shift Weigh, reflecting the interconnected nature of these macro factors.
In the crypto space, altcoins have also felt the pressure. XRP Consolidates Below Key EMAs as Geopolitical Risks Cap Recovery Momentum, while other tokens like Solana and Dogecoin have faced similar headwinds.
As the situation evolves, market participants will be watching for any de-escalation in the Middle East or shifts in Fed rhetoric that could alter the trajectory for Bitcoin and risk assets more broadly. For now, the path of least resistance appears tilted to the downside, with the $64,000 level serving as a critical line of defense against a deeper correction.
This article is for informational purposes only and does not constitute financial advice.
