Bitcoin Drops Below $65K as Geopolitical Tensions and Fed Rate Expectations Surge

Bitcoin Slides Below $65K as Geopolitical Tensions Ignite Oil and Bond Market Surges

Bitcoin descended below the $65,000 barrier on Thursday, succumbing to mounting pressure from escalating U.S.-Iran tensions. The largest cryptocurrency by market capitalization touched three-day lows near $64,799 on the Bitstamp exchange, reflecting a broader sell-off in risk assets triggered by regional geopolitical concerns.

The catalyst for the decline stemmed from heightened tensions over Houthi attacks on Saudi Arabian commercial shipping. U.S. President Donald Trump issued a stark warning regarding Iran in connection with these strikes, posting on Truth Social that he was “very disappointed” with the Houthis while referencing earlier maritime attacks on American vessels from 2025. This escalation triggered a risk-off environment across global financial markets.

The broader market impact was substantial. By the close of New York trading, the S&P 500 had contracted 1.2% while the Nasdaq shed 2.2%, indicating widespread equity market weakness. Simultaneously, crude oil prices rallied sharply, with Brent crude surging above the $100 per barrel threshold—its highest point since early June. These commodity moves underscored heightened market anxiety regarding potential economic disruption.

Federal Reserve Rate Hike Odds Surge Amid Inflation Concerns

Perhaps most concerning for cryptocurrency investors, inflation expectations surged once again. The Kobeissi Letter, a trading analytics resource, observed that “inflation expectations and interest rates are rising sharply again,” signaling renewed macroeconomic pressures. This concern manifested in U.S. 10-year bond yields, which climbed to 18-month highs—reflecting market expectations for extended periods of elevated interest rates.

The implications for crypto markets became clear through Federal Reserve rate expectations. According to CME Group’s FedWatch Tool, the probability of a 0.25% rate increase at the Federal Reserve’s July meeting climbed to approximately 40%—a dramatic reversal from odds near 12% just one week prior. Rate hikes historically weigh on cryptocurrency valuations, as they increase borrowing costs and redirect capital toward traditional yield-bearing assets.

Trader Perspectives Diverge on Bitcoin’s Path Forward

Market participants offered conflicting outlooks on Bitcoin’s near-term trajectory. Trader Exitpump cautioned that the recent relief rally appeared poised to conclude by late July, recommending followers close long positions and consider shorting below the $65,000 level. Other traders maintained bullish conviction, with Jelle suggesting Bitcoin remained “still making progress,” with potential for a sharp move toward $70,000 should current resistance levels clear.

Technical analyst Michaël van de Poppe identified the 21-week simple moving average at $64,073 as a crucial support level. According to his analysis, maintaining this level could support a near-term rally to $73,000, though losses below this threshold would signal further weakness. Notably, some altcoins including XRP demonstrated relative strength during the downturn, suggesting potential divergence in how digital assets respond to macroeconomic headwinds. As investors navigate rising interest rate expectations and geopolitical uncertainty, this divergence between Bitcoin’s weakness and altcoin resilience may offer clues about shifting risk appetite within digital asset markets.

Source: CME Group, via Cointelegraph. Not financial advice.