US-Iran Conflict Pushes Bitcoin and Ethereum Lower Amid Rising Rate Hike Odds

Bitcoin and Ethereum took a hit this week as tensions between the US and Iran escalated and rate hike odds rose. The pullback in both assets looks like a straightforward risk-off move rather than anything crypto specific, tracking closely with weakness in equities and rising Treasury yields.

The price of Bitcoin fell to around $76,600 to $78,000 over Tuesday and Wednesday, down about 1.5 to 2%, while Ethereum dropped to around $2,373 to $2,400, a decline of roughly 2 to 2.5%. The sharpest leg of the move saw around $115 million in leveraged long positions liquidated within an hour.

Despite the drawdown, both assets remain up sharply for the quarter, with Ether having gained 33% in August and 56% for the quarter as of recent reporting. This suggests that the current move looks like a pause or partial retracement within an established uptrend rather than a reversal, at least based on price action so far.

The immediate trigger for this week's weakness has been the renewed conflict between the US and Iran. The S&P 500 fell to its lowest level since August 4 during Tuesday's selloff, while Treasury yields climbed as investors priced in both geopolitical risk and shifting rate expectations.