Bitcoin retreated for the second day in a row, slipping 1.4% to trade just under $63,600 after briefly falling as low as $62,470 on Friday morning. This decline erased gains from earlier in the week when BTC briefly surpassed $65,000, reducing its market cap and pulling the broader crypto market down alongside global tech stocks.

Market Reaction and Price Movements

Following better-than-expected U.S. inflation data, Bitcoin initially appeared poised to push higher. However, it failed to hold above the $64,000 level, succumbing to renewed selling pressure after 6:30 p.m. on July 17. The cryptocurrency hit a session low of $62,732 in the early hours of Friday and struggled to regain momentum. Although a bounce back to around $63,300 occurred shortly after the lows, the asset ultimately remained below $63,600 by midday.

Bitcoin’s market capitalization declined from $1.3 trillion recorded midweek, while total cryptocurrency market capitalization fell 1.8% to approximately $2.26 trillion.

External Factors Driving the Sell-Off

The ongoing escalation of military tensions in the Middle East played a notable role in market jitters. Unconfirmed reports of damage to Iranian civilian infrastructure intensified fears of a worsening conflict, which concurrently pushed U.S. crude oil prices higher: West Texas Intermediate (WTI) surpassed $82 per barrel and Brent crude exceeded $87.

Global equities, especially technology-heavy indices like the Nasdaq, also retreated significantly. The tech sector faced pressure from a sell-off in artificial intelligence hardware stocks alongside geopolitical concerns, contributing to the broad risk-off environment affecting cryptocurrencies.

Macro Economic Context

Despite the recent CPI data offering temporary relief, several analysts argue that broader macroeconomic worries persist. A resilient U.S. economy may compel the Federal Reserve to maintain elevated interest rates longer or enact another rate hike by year-end. Rising mortgage rates, which have hit new yearly highs, add to these concerns and weigh on investor sentiment.

Nansen analysts anticipate that the current downward pressure on Bitcoin may be brief before accumulation phases resume, supported by smart money long ratios currently around 1.58.

material is for informational purposes only and is not financial advice