Bitcoin dropped below $71,000 on Wednesday after briefly rallying to $72,700 as optimism over a US-Iran ceasefire quickly faded amid renewed Middle East conflict.
The decline followed Israel launching large-scale strikes on Lebanon and Iran alleging ceasefire violations, which drove oil prices back above $96 per barrel and reversed earlier market optimism.
The rapid reversal underscored fragile market sentiment, with traders abandoning risk assets as geopolitical instability returned and macroeconomic pressures intensified.
Oil markets reacted sharply as the Strait of Hormuz saw only three vessel transits versus a typical 135 daily, leaving more than 800 ships stalled and fuelling concerns over prolonged supply disruption.
Ethereum fell 1.1% to $2,185 while gold edged lower and the US dollar remained steady, signalling cautious positioning rather than full-scale panic across global markets.
Federal Reserve minutes released the same day showed policymakers remain concerned about persistent inflation, with some officials open to further rate hikes if energy prices stay elevated.
The combination of geopolitical risk and a potentially hawkish Fed continues to weigh on Bitcoin, leaving the asset caught between fading ceasefire hopes and tightening financial conditions.
At the time of reporting, Bitcoin price was $70,893.91.