Investing.com– price continued to face downward pressure on Monday stemming from a panicky market sell-off following an Iranian strike against Israel, which also pushed the dollar up to five-month highs.
The world’s largest cryptocurrency fell 1.6% in the past 24 hours to $63,382.7, after a brief intraday rebound.
Bitcoin price under pressure from Iran-Israel jitters
Bitcoin was battered chiefly by worsening risk appetite after Iran launched a drone and missile strike against Israel on Saturday. This saw traders pivot largely into safe-haven assets such as the dollar and gold.
The dollar surged to a 5-½ month high, while gold prices briefly hit record highs.
Strength in the dollar was a key point of pressure on Bitcoin, given that it usually benefits from increased risk appetite in markets. The token has largely performed in contrast to the idea that it is a digital safe haven.
But Bitcoin saw some relief amid signs that the Iran-Israel conflict may not escalate further. Iran signaled it had concluded its strike against Israel, while Israeli ministers were also reported to be considering no immediate retaliation.
“As one of the only major assets trading 24/7, Bitcoin and other cryptocurrencies often see outsized reactions to breaking news on weekends before traditional markets open,” Joe Vezzani, the co-founder and CEO of LunarCrush, told Investing.com.
“While the initial response can be significant, historically these moves are often retraced once investors have time to fully digest new information,” he added.
Still, the rising geopolitical tensions also affected inflows in Bitcoin ETFs, with their pace notably moderating recently.
“Bitcoin ETF inflows have risen very gradually, especially compared to the pace in the first couple months post-ETF launches,” Citi analysts said in a Monday note.
“We expect flows to continue to be the main driver for Bitcoin prices (especially on a weekly basis), even as we head into the highly anticipated halving event,” they added.
Crypto price today: altcoins recover from weekend slump, but rate jitters weigh
Other major cryptocurrencies also experienced volatility following an eventful weekend.
World no.2 crypto rose 1.4% to $3,114.78, while fell 2% and climbed 1.6%.
But any major gains in crypto were also held back by the prospect of higher-for-longer U.S. interest rates, following hotter-than-expected inflation data and hawkish Federal Reserve signals from last week.
Traders were seen largely pricing out bets that the Fed will begin cutting interest rates in June- a scenario that bodes poorly for crypto markets.
Cryptocurrencies usually benefit from a low-rate, high-liquidity environment- a factor that was a key driver of the 2021 bull run.
Gains this year, however, were biased largely towards Bitcoin, as capital flows surged into the recently-approved spot Bitcoin exchange-traded funds in U.S. markets.
But this capital flows were also seen slowing in recent weeks, drumming up more uncertainty over the potential for more gains in Bitcoin.
The token flitted largely between $60,000 and $70,000 for a month after hitting record highs of over $73,000 in early-March.
U.K. to introduce new crypto, stablecoin legislation by mid-2023
In other crypto-related developments, Economic Secretary Bin Afolami said at the Innovate Finance Global Summit that the U.K. government plans to introduce legislation by mid-2023 covering stablecoins and various crypto activities like staking, exchange, and custody.
“We are now working at pace to deliver the legislation to put our final proposals for our regime in place,” Afolami said.
“Once it goes live, a whole host of crypto asset activities, including operating an exchange, taking custody of customers’ assets and other things, will come within the regulatory perimeter for the first time.”
This decision follows the 2023 financial markets bill that set the groundwork for regulating stablecoins and other cryptocurrencies as financial activities.
The Financial Conduct Authority and the Bank of England have both contributed to shaping this regulatory framework. The Bank of England will monitor significant stablecoin providers, whereas the Financial Conduct Authority will oversee broader crypto regulations.