Bitcoin traded around the $59,000 level on Wednesday after plunging to a 21-month low of $57,800, its weakest level since mid-September 2024.

The sharp correction comes as institutional investors continue to reduce exposure, with spot Bitcoin exchange-traded funds recording more than $222 million in net outflows on Tuesday, extending the recent streak of withdrawals.

Uncertainty surrounding developments between the United States and Iran has also added to investor caution, weighing on the world’s largest cryptocurrency.

US-Iran tensions pressure risk appetite

Geopolitical uncertainty remains elevated after Iran said on Tuesday that it would not meet with senior US envoys who traveled to Doha, Qatar, following last week’s military tensions.

Iranian officials added that both sides still need to finalize the terms of the ceasefire agreement signed two weeks ago before moving on to more complex issues, including potential restrictions on Tehran’s nuclear program.

Meanwhile, the Qatari government confirmed that US envoys Jared Kushner and Steve Witkoff would meet with Qatar’s prime minister to discuss ongoing US-Iran talks and regional developments, but no high-level meetings between Washington and Tehran are currently scheduled.

These developments underscore the fragility of the recent ceasefire agreement and increase uncertainty over the prospects for a lasting peace deal.

The rise in uncertainty has weakened investor appetite for risk assets, helping push Bitcoin down to a 21-month low of $57,800 on Wednesday.

Any collapse in negotiations or renewed military escalation between the two countries could further damage market sentiment and trigger another wave of selling in cryptocurrencies.

Institutional selling drives Bitcoin to fresh yearly lows

Institutional demand continued to weaken at the start of the week. Data from SoSoValue showed that US-listed spot Bitcoin ETFs recorded net outflows of $222.64 million on Tuesday, following $231.10 million in withdrawals on Monday.

Tuesday marked the ninth consecutive day of net outflows since mid-June, highlighting fading institutional appetite for Bitcoin exposure.

If the trend continues throughout the week, Bitcoin could face additional downside pressure in the near term.

Could quarter-end portfolio rebalancing support Bitcoin?

A research report published by K33 Research on Tuesday suggested that quarter-end portfolio rebalancing could provide short-term support for Bitcoin prices.

According to the report, data from the past 18 months show that in nine different months, net ETF flows during the six-day period surrounding month-end — including the final three trading days of a month and the first three trading days of the following month — differed significantly from the prevailing trend during the rest of the month.

A K33 Research analyst said: “In several cases, months in which Bitcoin underperformed the S&P 500 were followed by stronger ETF inflows around month-end and at the beginning of the next month.”

The analyst explained that this behavior is consistent with portfolio rebalancing, as investors may increase Bitcoin exposure after periods of relative underperformance in order to restore targeted asset allocations.

However, the relationship between portfolio rebalancing and Bitcoin ETF flows has not been entirely consistent. The other nine months in the sample did not exhibit the same pattern, suggesting that rebalancing is not a permanent driver of Bitcoin ETF flows but rather one of several factors influencing institutional demand.

Even so, the pattern has become more evident over the past four quarters. If it continues, quarter-end portfolio rebalancing could provide meaningful support for Bitcoin and potentially help fuel a short-term rebound during the opening trading sessions of July.

Oil prices fell more than 1% on Wednesday as negotiations between the United States and Iran continued in an effort to reach a final agreement to end the war between the two countries, while investors awaited US petroleum inventory data.

Brent crude futures declined by $1.14, or 1.6%, to $71.81 per barrel by 08:59 GMT, while US West Texas Intermediate crude futures fell $1.11, or 1.6%, to $68.39 per barrel.

“The stalled talks between the United States and Iran are raising concerns about fresh supply disruptions,” said Tamas Varga, analyst at PVM Associates. “On the other hand, investors remain confident that any issues hindering the negotiations will eventually be resolved.”

He added: “Overall, the bearish trend remains intact, although hard data such as falling inventories or another closure of the Strait could quickly change market sentiment.”

Indirect technical talks between the United States and Iran are currently taking place in Doha, mediated by Qatar and Pakistan, according to a source with direct knowledge of the discussions who spoke to Reuters on Wednesday.

Jared Kushner, US President Donald Trump’s son-in-law, and special envoy Steve Witkoff arrived in Doha for what the White House described as “high-level” talks on Tuesday. However, both Iran and Qatar said the US delegation would meet with mediators rather than Iranian officials directly.

Largest quarterly loss in years

Brent crude fell by roughly $45 per barrel during the second quarter, marking its largest quarterly decline since the 2008 global financial crisis.

US crude futures dropped by around $31 per barrel, their steepest quarterly decline since 2020, when the COVID-19 pandemic triggered a collapse in global oil demand.

The losses followed progress toward ending the conflict in the Middle East after prices had surged sharply in March following the outbreak of hostilities.

After five consecutive monthly increases, analysts lowered their 2026 oil price forecasts for the first time since the start of the Iran war, as shipping activity through the Strait of Hormuz resumed, easing concerns about prolonged supply disruptions, according to a Reuters survey.

Oil tanker traffic through the strategic waterway has started to recover, with US Vice President JD Vance saying that oil flows through the Strait have returned to pre-war levels.

US inventories in focus

Investors are now awaiting official US petroleum inventory data from the Energy Information Administration, due at 14:30 GMT on Wednesday.

Market sources said US crude oil inventories declined again last week, according to figures released by the American Petroleum Institute on Tuesday.

Sterling fell for the first time in a week on Wednesday as a stronger US dollar gained support from rising Treasury yields ahead of key labor market data, while investors awaited comments from new Federal Reserve Chair Kevin Warsh.

The pound slipped 0.23% to $1.3234 after advancing in each of the previous four sessions, its longest daily winning streak in a month.

Sterling ended June down 0.2%, extending its decline in the first half of the year to 1.6%, marking its weakest start to a year since 2022, when it fell nearly 10% between January and June.

Political uncertainty has also added to investor concerns. With Labour Prime Minister Keir Starmer preparing to step down, markets are questioning whether leading contender Andy Burnham can revive the British economy without placing additional strain on already stretched public finances.

The dollar’s resurgence, supported by the strength of the US economy and equity markets, has been a major factor weighing on sterling and other currencies.

Against the euro, however, sterling performed better during the second quarter, gaining 1.4% and trading near its strongest level since last August.

UK rate expectations shift

Expectations for additional Bank of England rate hikes this year have eased since tensions in the Gulf began to subside, allowing oil prices to retreat toward pre-war levels.

Money markets currently assign a 90% probability that the Bank of England will raise interest rates before year-end, compared with earlier expectations that had priced in as many as three rate increases.

The Bank of England is scheduled to meet later this month to discuss monetary policy, although economists broadly expect interest rates to remain unchanged.

US jobs data in focus

Among the most important events for currency markets this week, including sterling, is Thursday’s US employment report, which could either reinforce or challenge growing expectations that the Federal Reserve may raise interest rates again in the coming months.

Central bank governors from around the world are gathering this week in Sintra, Portugal, for the European Central Bank’s annual forum.

Federal Reserve Chair Kevin Warsh will participate in one of the forum’s sessions before delivering remarks on Wednesday.

Given his preference for concise communication and limited public commentary from Federal Reserve officials, investors will closely scrutinize his remarks for clues about the future path of US interest rates.

Bank of England Governor Andrew Bailey is also scheduled to speak on Wednesday.

“Andrew Bailey may be the person to watch,” said David Stritch, strategist at Caxton. “The Bank of England is currently the most balanced among major central banks in terms of policy direction, and so far Bailey has remained largely vague about the future path of policy.”

Gold prices declined in European trading on Wednesday, extending losses for a third consecutive session and trading below the $4,000-per-ounce threshold near a seven-month low, pressured by continued strength in the US dollar against a basket of major currencies.

Markets are closely watching remarks from Federal Reserve Chair Kevin Warsh later today at the European Central Bank Forum in Sintra, along with additional key US labor market data, as investors reassess expectations for US interest rate hikes this year.

The Price

• Gold prices fell 1.2% to $3,960.53 per ounce, down from an opening level of $4,007.41. The session high was recorded at $4,018.53.

• At Tuesday’s settlement, gold lost 0.25%, marking a second consecutive daily decline. The metal also touched a seven-month low of $3,942.55 per ounce as rising US Treasury yields weighed on demand.

• Gold declined 11.75% during June, marking a fourth consecutive monthly loss and its steepest monthly decline since October 2008, driven by mounting selling pressure linked to increasingly hawkish Federal Reserve expectations.

US Dollar

The US Dollar Index rose 0.25% on Wednesday, extending gains for a second straight session and reflecting continued strength in the greenback against a basket of global currencies.

As is typically the case, a stronger dollar makes dollar-denominated gold less attractive for holders of other currencies.

The US currency has received additional support from the recent rise in long-term Treasury yields, particularly after positive labor market data reinforced expectations that the Federal Reserve could raise interest rates at least once more this year.

US interest rates

• Cleveland Federal Reserve President Beth Hammack said on Tuesday that she could still support additional rate hikes if inflationary pressures fail to ease.

• According to the CME FedWatch Tool, markets currently assign a 66% probability that the Federal Reserve will leave interest rates unchanged at its July meeting, while the probability of a 25-basis-point rate hike stands at 34%.

• For December, markets price a 17% probability of rates remaining unchanged and an 83% probability of a 25-basis-point increase.

Kevin Warsh

At 13:00 GMT, Federal Reserve Chair Kevin Warsh is scheduled to deliver an important speech at the European Central Bank Forum in Sintra, Portugal.

US labor market

Investors are also awaiting additional key US labor market data. ADP private-sector employment figures for June are due later today, followed on Thursday by weekly jobless claims and the official nonfarm payrolls report.

Outlook for gold

Market strategist Ilya Spivak said: “It appears that rising yields are the main force driving gold lower. The US dollar has also strengthened at the same time, which reinforces that view.”

SPDR Gold Trust

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Tuesday for a second consecutive session, leaving total holdings at 1,005.08 metric tons, the lowest level since September 24, 2025.