Bitcoin fell to $62,000 on Wednesday
after the memorandum of understanding (MOU) underpinning the ceasefire between the US and Iran was "terminated" following overnight exchanges of fire between the two sides. Investors were also awaiting the minutes of the latest Federal Reserve meeting.
The world's largest cryptocurrency was last trading 1.8% lower at $62,143.2 by 1:34 PM, after rising above $64,500 in the previous session.
New tensions between the US and Iran are raising oil prices, weighing on the crypto market.
Speaking at the NATO summit in Turkey, Trump said Tehran had violated the terms of their shaky ceasefire agreement. "We're making a deal, and everyone agrees. No nuclear weapons. We're making a deal. They're going out, talking to the press, saying we didn't even discuss this. There's something wrong with them. They're nuts. As far as I'm concerned, it's over," he said.
Trump's comments came after Washington struck Iranian military targets on Tuesday in response to Tehran's renewed attacks on commercial shipping in the Strait of Hormuz.
Iran responded with missile and drone strikes against US military installations in the Gulf, stoking fears of a wider regional conflict and potential disruptions to global energy supplies.
Brent crude rose as traders priced in the renewed risk of supply disruptions through the Strait of Hormuz, renewing concerns that inflationary pressures could complicate the Federal Reserve's policy outlook.
Markets are now focused on the minutes of the Federal Open Market Committee's June meeting, due later on Wednesday, for signals on how policymakers are assessing inflation risks.
Despite Wednesday's decline, institutional demand for Bitcoin remained resilient. U.S.-listed spot Bitcoin ETFs recorded three consecutive days of net inflows on Tuesday, according to SoSoValue.
The inflows into ETFs helped reverse a recent streak of outflows and supported Bitcoin's recovery from its late-June lows, although weekly flows remained generally negative after significant outflows in previous sessions.
SEC May Propose Cryptocurrency Rule This Month
The U.S. Securities and Exchange Commission (SEC) may propose its first major cryptocurrency rule as early as this month, potentially easing fundraising and regulatory requirements for cryptocurrency startups, according to the agency's updated rulemaking agenda. The proposal, known as "Reg Crypto," is expected to provide exemptions or "safe harbors" for certain cryptocurrency-related activities that would otherwise fall under U.S. securities laws.
This move comes as the SEC, under Chairman Paul Atkins, seeks to establish a clearer regulatory framework for digital assets, while Congress considers broader cryptocurrency legislation.