Bitcoin fell to a more than six-week low as the US-Iran war, ETF outflows, and interest rate fears pressure the crypto market

Bitcoin fell to its lowest level in more than six weeks as anxieties over the global economic outlook and capital outflows from US exchange-traded funds exerted downward pressure on the largest cryptocurrency.

Bitcoin recorded a decline of up to 2.5%, hitting $73,294 in Singapore on Thursday, its lowest point since April 14. Ether, the world's second-largest cryptocurrency, dropped more than 4% to $1,970, touching a near two-month low.

Fears that the ongoing war between the US and Iran will fuel inflation and lead to fresh interest rate hikes are making investors nervous, even as equity markets trade at historic highs fueled by optimism surrounding artificial intelligence, Bloomberg notes.

US spot Bitcoin ETFs have recorded net outflows of approximately $1.5 billion so far in May.

Bitcoin's weakness "appears to be driven mostly by macro factors and not crypto-specific market issues," said Sean McNulty, head of Asia-Pacific derivatives trading at FalconX.

As he explained, higher US bond yields and a stronger dollar have led to tighter financial conditions, while capital withdrawals from ETFs and reports of large stake sales in the iShares Bitcoin Trust, the largest Bitcoin ETF, have further weighed on investor sentiment.

For his part, IG Markets analyst Tony Sycamore noted that cryptocurrency traders are now adopting a more cautious stance, waiting for clearer developments from the Middle East.

"At the same time, as equity markets begin to show signs of fatigue, Bitcoin is coming under pressure as investors unwind leveraged long positions after breaking through key support levels near $70,000," Sycamore pointed out, adding that short-term risks remain skewed to the downside.

Source: Brief