Bitcoin fell for a second consecutive session as geopolitical concerns and shifting expectations around monetary policy are creating a less supportive environment for risk assets.
On the geopolitical front, reported hurdles in the dialogue between the United States and Iran have reduced hopes for a near-term resolution.
The lack of alignment on key issues raises the risk of prolonged tensions and could fuel demand for safe-haven assets, weighing on risk assets such as bitcoin.
Monetary policy expectations could also weigh on the cryptocurrency. The Bank of Japan held rates steady but revealed internal divisions that signalled risks of future tightening.
Meanwhile, attention turns to the upcoming Federal Reserve decision, where rates are expected to remain unchanged. However, forward guidance will be critical, especially as global central banks navigate inflation risks linked to geopolitical developments in the Middle East. A more cautious monetary policy stance could drive Treasury yields up and weigh on non-yielding assets like bitcoin.
Additionally, ETF flows turned negative, with USD 263 million in outflows, the first in two weeks. Looking ahead, Bitcoin could experience volatility as it could remain highly sensitive to geopolitical headlines and signals from central banks.
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