Bitcoin under pressure as U.S.-Iran escalation lifts oil

Bitcoin BTC$62,725.06 and the broader cryptocurrency market came under pressure Tuesday after the US and Iran exchanged aerial strikes, sending the dollar higher.

BTC, the leading cryptocurrency by market capitalization, slipped to $62,657 in Asian trading hours, down nearly 1% since midnight UTC, according to CoinDesk data. Ether (ETH), XRP (XRP), and solana (SOL) fell between 1% and 2.3%. WTI crude futures jumped more than 2% to $72.27, while the Dollar Index held steady above 101.00, maintaining Tuesday’s gains.

The U.S. said it launched “powerful strikes” against Iran following attacks on three ships in the Strait of Hormuz, including Qatari and Saudi tankers. In response, Iran said it targeted “85 US military installations” in retaliation for strikes on its Hormozgan and Mahshahr provinces.

The scale of the escalation appears to have pushed the two nations’ ceasefire to the brink of collapse.

The Iran war erupted in late February, pushing oil prices well above $100 per barrel and generating a massive inflationary shock worldwide. While prices have since crashed back below $60, inflation expectations among consumers have continued to rise, fueling fears of interest rate hikes across the world, including in the US.

Higher rates make it more difficult for traders to abandon yields from supposedly safe bonds in favor of higher-risk assets such as cryptocurrencies.