Bitcoin drops as inflation hits 3-year high amid Iran conflict

Bitcoin and Crypto Markets Slide as US-Iran Conflict and Inflation Data Rattle Investors

Bitcoin fell below $61,000 on Wednesday as escalating hostilities between the United States and Iran, combined with a fresh inflation reading showing prices climbing at their fastest pace in three years, pushed investors further away from risk assets and deepened an already brutal stretch for the cryptocurrency market.

The flagship cryptocurrency opened trading at $61,672.20 on Wednesday, down 2.3% from the previous day, and continued sliding to around $60,938 by early morning, according to Yahoo Finance. Ethereum dropped 3.1% to open at $1,638.45 before falling further to $1,615. XRP has also been caught in the downdraft, trading well below its 50-day and 200-day moving averages amid weeks of sustained selling pressure.yahoo

Geopolitical Turmoil Fuels Risk-Off Mood

The crypto sell-off is unfolding against the backdrop of a rapidly deteriorating security situation in the Middle East. Iran launched coordinated missile and drone attacks targeting U.S. military installations in Bahrain, Jordan, and Kuwait after an Iranian drone downed a U.S. Apache helicopter near the Strait of Hormuz. The United States retaliated with strikes, and President Trump warned of further action. Earlier in the week, Israel and Iran had traded their worst strikes in months after a ceasefire faltered.aljazeera

The conflict has sent energy prices surging, which in turn has driven U.S. inflation higher. The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index rose 4.2% year-over-year in May, matching forecasts but marking the highest level since April 2023. Energy prices jumped 3.9% in the month alone, accounting for more than 60% of the monthly increase, while gasoline prices soared 40.5% on an annual basis. Core inflation, which strips out food and energy, came in at 2.9% annually, also in line with expectations.nytimes

A Market Under Siege

Wednesday’s declines extend a punishing stretch for crypto. Bitcoin closed the week ending June 5 down nearly 20%, its steepest weekly percentage drop since the collapse of FTX in November 2022. The token briefly touched $59,130 during that rout before stabilizing in the low $60,000 range. The broader crypto market’s total capitalization has contracted to roughly $2.1 trillion, down from a peak of $4.2 trillion last October, according to data cited by Newsweek and TradingView.cryptorank

Investopedia reported that at current levels, Bitcoin is down roughly 30% since the start of 2026, with the cryptocurrency trading at less than half its record high above $126,000 reached in October 2025. Billions of dollars have been liquidated from leveraged positions over recent weeks, with CoinDesk reporting $3 billion wiped out in a single two-day stretch in early June.investopedia

Outlook Remains Uncertain

While the CPI data coming in line with expectations offered a brief reprieve from fears of an upside surprise, markets showed little lasting relief. CNBC reported that traders now expect the Federal Reserve to hold rates steady for much of the year, with the next potential move possibly a cut in December. Analysts at the Economic Times warned that Bitcoin’s modest rebound may prove short-lived as ETF outflows, weakening technical indicators, and shifting rate expectations continue to weigh on sentiment.cnbc