Investing.com– The price continued to face downward pressure on Monday stemming from a panic sell-off in the market following an Iranian attack on Israel, which also propelled the dollar to five-month highs.
The world's largest cryptocurrency fell 1.6% in the last 24 hours to $63,382.7, after a brief intraday rally.
Bitcoin price under pressure due to jitters between Iran and Israel
Bitcoin was mainly affected by worsening risk appetite after Iran launched a drone and missile attack against Israel on Saturday. This caused traders to largely pivot towards safe-haven assets such as the dollar and gold.
The dollar rose to a five-and-a-half-month high, while gold prices briefly hit record highs.
The strength of the dollar was a key point of pressure on Bitcoin, as it typically benefits from increased risk appetite in the markets. The token has largely functioned in contrast to the idea that it is a digital safe haven.
But Bitcoin saw some relief amid signs that the conflict between Iran and Israel may not escalate further. Iran signaled that it had concluded its attack on Israel, while Israeli ministers were also reported to be not considering immediate retaliation.
“As one of the only major assets that trade 24/7, Bitcoin and other cryptocurrencies often experience outsized reactions to breaking news on weekends before traditional markets open. “Joe Vezzani, co-founder and CEO of LunarCrush, told Investing.com.
“While the initial response can be significant, historically these moves often reverse once investors have time to fully digest the new information,” he added.
Still, rising geopolitical tensions also affected Bitcoin ETF inflows, the pace of which moderated noticeably recently.
“Bitcoin ETF inflows have increased very gradually, especially compared to the pace of the first two months following the ETFs' launch,” Citi analysts said in a Monday note.
“We expect flows to continue to be the main driver of Bitcoin prices (especially on a weekly basis), even as we approach the long-awaited halving event,” they added.
Crypto Price Today: Altcoins Rebound From Weekend Drop, But Rate Jitters Weigh Down
Other major cryptocurrencies also experienced volatility after an eventful weekend.
The world's No. 2 cryptocurrency rose 1.4% to $3,114.78, while it fell 2% and rose 1.6%.
But any major gains in cryptocurrencies were also held back by the prospect of higher US interest rates for longer, following higher-than-expected inflation data and hawkish signals from the Federal Reserve last week.
Traders were seen largely discounting bets that the Federal Reserve will begin cutting interest rates in June, a scenario that bodes poorly for crypto markets.
Cryptocurrencies typically benefit from a low rate and high liquidity environment, a factor that was a key driver of the 2021 bull market.
However, this year's gains were largely skewed towards Bitcoin, as capital flows increased into newly approved Bitcoin exchange-traded funds in US markets.
But these capital flows have also slowed in recent weeks, creating more uncertainty about the potential for further gains in Bitcoin.
The token largely fluctuated between $60,000 and $70,000 for a month after hitting all-time highs of over $73,000 in early March.
UK to introduce new cryptocurrency and stablecoin legislation in mid-2023
In other cryptocurrency-related developments, Economy Secretary Bin Afolami said at the Innovate Finance Global Summit that the UK government plans to introduce legislation in mid-2023 covering stablecoins and various crypto activities such as betting, trading and custody.
“We are now working apace to deliver legislation to put into practice our final proposals for our regime,” Afolami said.
“Once it goes live, a large number of cryptoasset activities, including operating an exchange, custody of client assets and other things, will come within the regulatory perimeter for the first time.”
This decision follows the 2023 Financial Markets Bill that laid the foundation for regulating stablecoins and other cryptocurrencies as financial activities.
Both the Financial Conduct Authority and the Bank of England have helped shape this regulatory framework. The Bank of England will oversee major stablecoin providers, while the Financial Conduct Authority will oversee broader crypto regulations.
