Bitcoin’s price rebounded on Monday, recuperating from significant losses over the weekend triggered by heightened geopolitical tensions following an Iranian strike against Israel. The cryptocurrency, which had dipped as low as $61,000 during the weekend, climbed 1.6% in the past 24 hours to reach $65,439.5.
The weekend slump in Bitcoin’s price was primarily attributed to deteriorating risk appetite among investors, prompted by Iran’s drone and missile attack on Israel. This geopolitical turmoil drove traders towards traditional safe-haven assets like the dollar and gold, resulting in Bitcoin facing downward pressure.
The strength of the dollar, which reached a 5-½ month high, contributed to Bitcoin’s struggles as it typically performs inversely to the dollar in response to shifts in market sentiment. Despite being considered a digital safe haven by some, Bitcoin’s performance often contradicts this notion.
However, Bitcoin experienced some relief as tensions between Iran and Israel appeared to ease, with signals suggesting that the conflict might not escalate further. Iran indicated that it had completed its strike against Israel, while Israeli officials were reportedly considering refraining from immediate retaliation.
Alongside Bitcoin, other major cryptocurrencies also witnessed a recovery on Monday after the weekend slump. Ethereum, the second-largest crypto, rose by 3.7% to $3,187.78, while Solana and XRP gained 7% and 3%, respectively.
Nevertheless, the potential for higher U.S. interest rates, fueled by hotter-than-expected inflation data and hawkish signals from the Federal Reserve, tempered significant gains in the crypto market. Traders adjusted their expectations, moving away from bets on the Fed cutting interest rates in June, a scenario that is typically favorable for cryptocurrencies.
The current environment contrasts with the low-rate, high-liquidity conditions that drove the crypto market’s bull run in 2021. While Bitcoin saw significant capital inflows earlier this year, particularly into U.S.-approved spot Bitcoin exchange-traded funds, these inflows have slowed in recent weeks, casting doubt on the potential for further price increases.
Bitcoin has remained relatively range-bound between $60,000 and $70,000 for the past month after reaching record highs of over $73,000 in early March. The token’s future trajectory remains uncertain as market participants closely monitor geopolitical developments and central bank policies for potential impacts on crypto markets.