The price of Bitcoin took a hit on Tuesday as investors’ risk appetite waned amidst the backdrop of elevated U.S. interest rates and ongoing geopolitical unrest in the Middle East.
With the dollar surging to its highest level in over five months this week, the broader crypto market faced pressure, exacerbated by robust retail sales figures and inflation data, which tempered expectations of imminent U.S. interest rate adjustments.
Bitcoin recorded a 3.6% decline over the past 24 hours, settling at $62,555.0 by 01:05 ET (05:05 GMT). Traders predominantly favored traditional safe-haven assets like the dollar and gold amidst the prevailing market sentiment.
Hong Kong’s approval of spot crypto exchange-traded funds (ETFs) on Monday failed to provide significant uplift, as subdued risk appetite overshadowed the development. While this move opens up exposure to crypto markets for Hong Kong and Chinese investors, it comes in the wake of China’s 2021 ban on cryptocurrencies, citing concerns related to gambling and market manipulation. Despite regulatory green lights for three ETF providers, no offerings have been launched yet.
The potential for Hong Kong ETFs to trigger a Bitcoin rally akin to that witnessed in U.S. markets earlier this year remains uncertain. Although the approval of spot U.S. ETFs sparked a remarkable surge in the cryptocurrency over the past couple of months, recent indications suggest a slowdown in capital flows as enthusiasm wanes.
In the broader cryptocurrency landscape, prices experienced a downturn on Tuesday amidst persistent concerns over Iran-Israel tensions and the specter of prolonged U.S. interest rate hikes. Ethereum dipped 2.9% to $3,047.26, while XRP and Solana registered losses of 2.1% and 9.8%, respectively.
Over the weekend, cryptocurrency prices underwent a flash crash following an Iranian strike against Israel, although a partial recovery followed as reports indicated minimal damage from the attack. However, fresh reports this week suggesting potential Israeli retaliation have contributed to ongoing market jitters.
The dollar’s ascent to five-month highs fueled by hotter-than-anticipated U.S. retail sales data, coupled with anticipation surrounding an upcoming speech by Fed Chair Jerome Powell, kept traders on edge. In this risk-averse climate, traders exhibited growing reluctance towards speculative assets such as cryptocurrencies, a sentiment reinforced by outflows observed in crypto investment products, as reported by digital asset manager CoinShares on Monday.
