Bitcoin fell around 3% on Thursday, dropping below the key $70,000 level to trade around $69,500 after briefly climbing above $71,000 earlier in the day.
The move marks a sharp reversal from just days ago, when Bitcoin surged close to $76,000 and appeared poised to hold above the psychologically important $70,000 threshold.
Rising energy prices, persistent inflation and shifting expectations around interest rates are weighing on sentiment, while large-holder selling and regulatory uncertainty add further headwinds.
With volatility increasing, the near-term direction for Bitcoin is likely to remain closely tied to developments in global markets, particularly energy prices and central bank policy signals.
Oil surge and geopolitical tensions weigh
The decline comes as rising geopolitical tensions in the Middle East triggered a sharp spike in energy prices, dampening investor appetite for risk assets.
Brent crude surged as high as $119 per barrel, while West Texas Intermediate climbed toward $97.
The price spike followed missile strikes by Iran on a key facility in Qatar, along with earlier attacks on Iran’s South Pars gas field.
The escalation has heightened uncertainty across global markets, with energy emerging as a key driver of sentiment.
Inflation and rate expectations add pressure
Higher oil prices have intensified inflation concerns, compounding existing macro pressures.
Recent data showed producer price inflation rising to 3.4%, even before the energy shock.
Jerome Powell signalled that interest rates would not be cut until there is clearer progress on inflation, reducing expectations for near-term monetary easing.
The Federal Reserve has kept rates in the 3.5% to 3.75% range, while policymakers continue to monitor volatility in energy markets.
Treasury Secretary Scott Bessent said the government does not plan to intervene directly in financial markets, though measures such as releasing oil from the Strategic Petroleum Reserve remain under consideration.
The shift in rate expectations has weighed on cryptocurrencies, which tend to be sensitive to liquidity conditions and investor risk appetite.
Whale selling adds to downward pressure
On-chain data suggests that large, early Bitcoin holders have contributed to the recent sell-off.
Blockchain analytics platform Lookonchain reported that at least two long-term holders sold more than 1,650 BTC, worth over $117 million.
One large holder offloaded 650 BTC after previously selling 11,000 BTC, while another early adopter liquidated a full 1,000 BTC position.
The selling activity has added to short-term volatility, reinforcing downward pressure on prices.
Citi cuts price forecasts
Adding to cautious sentiment, Citigroup lowered its 12-month price forecasts for both Bitcoin and Ethereum earlier this week.
The analysts reduced their Bitcoin target to $112,000 from $143,000, and their Ethereum forecast to $3,175 from $4,304.
Citi strategist Alex Saunders said slower progress on US crypto legislation has narrowed the window for regulatory catalysts that could support institutional adoption and ETF-driven inflows.
The firm warned that under a recessionary scenario, Bitcoin could fall as low as $58,000, while a bullish scenario could see prices rise to $165,000, depending on demand conditions.
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