Bitcoin is standing at a critical crossroads after a sharp selloff pushed the digital asset back toward one of the most important support zones of the current market cycle, as investors continue to monitor developments in the Middle East and await signals from the Federal Reserve.

Bitcoin fell to $59,100 on June 5, a level that has historically served either as a major floor for previous declines or as a gateway to much deeper losses.

Federal Reserve meeting

Expectations increasingly point toward further monetary tightening by the Federal Reserve later this year. Analysts now anticipate that the Federal Open Market Committee could deliver two additional 25-basis-point rate hikes before year-end in response to higher energy prices and continued strength in the US labor market.

Even before the latest jobs report, investors had been raising their expectations for higher interest rates amid concerns that the energy crisis linked to the conflict with Iran could intensify inflationary pressures.

Weekly data released by US regulators showed that investors cut their bullish euro positions to the lowest level in three months during the week ended June 4, while bearish positions against the Japanese yen exceeded $10 billion, according to LSEG data.

The Federal Open Market Committee is scheduled to meet next week in its first gathering under Chair Kevin Warsh. Markets currently see roughly a 50% chance of a rate hike by September, a factor that analysts say could limit excessive dollar buying in the near term.

Strategists at Barclays noted that several upcoming developments, including shifts in risk sentiment, the possibility of a US-Iran agreement, and the upcoming Federal Reserve meeting, could place limits on further dollar strength in the short run.

Middle East developments

In a fresh development in the Middle East, Israel announced that it carried out strikes against military targets in western and central Iran on Monday, despite reports suggesting that US President Donald Trump had urged Israeli Prime Minister Benjamin Netanyahu to refrain from launching additional attacks.

The escalation pushed oil prices up by around 5%, adding to investor concerns at a time when markets were already facing a sharp correction in highly valued technology stocks.

At the time of writing, Bitcoin had recovered to $61,966. However, the rebound has not resolved the key question facing the market: is Bitcoin forming a major bottom, or is the current move merely a temporary pause before another leg lower?

The 200-week exponential moving average remains one of the most closely watched long-term indicators among Bitcoin traders. Analyst Michael van de Poppe noted that Bitcoin has formed major bottoms near this level in most previous bear-market cycles, with 2022 being the most notable exception.

According to analyst Dan Crypto Trades, the current decline ranks among the deepest pullbacks of its kind in Bitcoin’s history, making the present market structure particularly difficult to interpret. The current price zone is attractive enough to draw buyers, but the intensity of the selling pressure means a rapid recovery cannot be taken for granted.

The analyst added an important technical observation, noting that in previous instances where Bitcoin lost major support levels, prices typically accelerated lower and remained below those levels for extended periods.

This time, however, Bitcoin has managed to remain near its previous low, at least for now, opening the door to a different market structure. If buyers continue defending this area, Bitcoin could begin forming a broad trading range between approximately $60,000 and $80,000.

While such a range would not immediately confirm a bullish reversal, it would suggest that sellers are struggling to push the market into a deeper breakdown.

Oil prices surged by more than 4% on Monday after fresh Israeli strikes on Iran and renewed attacks in Lebanon undermined hopes that the broader regional conflict could soon come to an end.

During trading, Brent crude futures rose by $4.02, or 4.3%, to $97.11 per barrel by 09:14 GMT, while US West Texas Intermediate crude futures gained $3.90, or 4.3%, to reach $94.44 per barrel.

Middle East developments

Israel said on Monday that it had targeted the Mahshahr petrochemical complex in southwestern Iran, along with other military targets, despite reports indicating that US President Donald Trump had urged Israeli Prime Minister Benjamin Netanyahu to refrain from carrying out additional attacks.

Iran’s semi-official Fars News Agency quoted a local official as saying that parts of the facility had sustained damage.

Giovanni Staunovo, an analyst at UBS, said that the exchange of strikes between Iran and Israel is increasing market concerns that restrictions on shipping through the Strait of Hormuz could remain in place for a longer period, pushing oil prices higher.

Roughly one-fifth of global daily oil and liquefied natural gas supplies pass through the Strait of Hormuz off the coast of Iran.

Later on Monday, comments attributed to Iran’s ambassador to Moscow indicated that the strait would remain open, but under new conditions to be determined by Iran and Oman, including the imposition of transit fees.

Monday’s gains erased the losses oil prices suffered on Friday, when they fell on hopes that tensions between the United States and Iran might ease.

Since the outbreak of the conflict a little over 100 days ago, Brent crude has climbed 34%, while West Texas Intermediate has surged 41%. Brent prices had approached $120 per barrel in March.

On Sunday, Iran launched a new wave of missiles at Israeli targets in response to strikes carried out in Lebanon.

Despite the escalation, US President Donald Trump maintained that a broader agreement to end the conflict remains highly achievable.

Iran has made a ceasefire in Lebanon a condition for any peace agreement with Washington. Lebanon and Israel announced a ceasefire agreement on June 3 following negotiations held in Washington.

OPEC+

Amid the supply disruptions caused by the conflict, the OPEC+ alliance approved its fourth increase in oil production targets in four months on Sunday.

Analysts said the decision is unlikely to have a major impact because many alliance members are already unable to reach their production targets, either due to disruptions linked to the Strait of Hormuz closure or, in Russia’s case, because Ukrainian drone attacks have weakened production capacity.

Jorge Leon, Head of Geopolitical Analysis at Rystad Energy, said the practical impact of such a decision under current market conditions would be close to zero.

He added that refineries around the world have rushed to secure crude oil from any available source to replace the millions of barrels per day that are no longer flowing through the strait, noting that the world has lost more than one billion barrels of supply since the conflict began.

The US dollar traded near its highest level in almost two months on Monday after a strong US employment report prompted investors to increase bets that the Federal Reserve will raise interest rates later this year, while the Japanese yen continued to drift toward levels that could trigger official intervention in the foreign exchange market.

Currency market moves were relatively calm compared to the turbulence seen across global financial markets, where a sharp selloff in technology stocks spread across Asia and weighed on European equities.

The dollar maintained the gains recorded after Friday’s employment report, which showed that US nonfarm payrolls increased by 172,000 jobs last month, significantly exceeding market expectations. The euro remained close to a nine-week low at $1.1525, while the British pound traded near a three-week low at $1.3344.

Jonas Goltermann, Chief Markets Economist at Capital Economics, said the US jobs report paints a picture of a labor market that continues to strengthen despite the ongoing energy price shock.

Federal Reserve meeting

He added that this combination makes further monetary tightening by the Federal Reserve later this year more likely, noting that Capital Economics now expects the Federal Open Market Committee to deliver two additional 25-basis-point rate hikes this year in response to higher energy costs and continued strength in the US labor market.

Even before the jobs report was released, investors had already been increasing expectations for higher interest rates as the global energy crisis linked to the conflict with Iran continued to fuel inflation concerns.

Weekly data from US regulators showed that investors cut their bullish euro positions to the lowest level in three months during the week ended June 4, while bearish bets against the Japanese yen increased to more than $10 billion, according to LSEG data.

The Federal Open Market Committee is scheduled to meet next week in its first gathering under Chair Kevin Warsh. Markets are currently pricing in roughly a 50% chance of a rate hike by September, which analysts say could limit excessive dollar buying in the near term.

Strategists at Barclays said upcoming factors, including shifts in risk appetite, the possibility of a US-Iran agreement, and the upcoming Federal Reserve meeting, may cap further dollar gains in the short term.

Middle East developments

In a new development in the Middle East, Israel announced that it carried out strikes against military targets in western and central Iran on Monday, despite reports that US President Donald Trump had urged Israeli Prime Minister Benjamin Netanyahu to refrain from launching additional attacks.

The developments pushed oil prices up about 5%, adding further concerns for investors already dealing with a sharp selloff in highly valued technology stocks.

Over the past two weeks, the dollar has benefited from its safe-haven status, in addition to expectations of a widening interest rate gap between the United States and other major economies, a factor that has particularly pressured the Japanese yen.

Japanese yen

The yen has now surrendered the gains achieved after Tokyo intervened in the currency market with approximately ¥11.7 trillion, equivalent to about $73 billion, a little more than a month ago, when the currency fell to its weakest level since July 2024 at ¥160.725 per dollar. The Japanese currency traded near ¥160.19 on Monday.

Reuters sources indicated that the Bank of Japan is expected to raise interest rates this month unless a major escalation in the Middle East conflict causes severe market disruption, while higher fuel costs resulting from the energy shock continue to increase inflationary pressures on the Japanese economy.

Sim Moh Siong, Market Strategist at OCBC, said this leaves the yen in a wait-and-see position because markets have already almost fully priced in a rate hike.

He added that any additional support for the yen from rate hike expectations will depend on whether the Bank of Japan signals a faster-than-expected pace of future interest rate increases.

Silver prices fell in European trading on Monday for a second consecutive session, hitting their lowest level in three months as a stronger US dollar and rising oil prices weighed heavily on the precious metal following renewed military exchanges between Iran and Israel.

The latest escalation comes as Washington and Tehran continue negotiations aimed at ending the conflict that has persisted for three months, with President Donald Trump seeking a diplomatic resolution before tensions in the Middle East deteriorate further.

Price Overview

• Silver prices declined 2.4% to $66.17 per ounce, the lowest level since March 23, down from an opening price of $67.78. The session high was recorded at $68.49.

• On Friday, silver fell 8.3%, marking its second decline in three sessions and its largest daily loss since May 15, following stronger-than-expected US employment data.

• The white metal lost 10% last week, extending its losing streak to four consecutive weeks, as a stronger US dollar and rising Treasury yields pressured prices.

US Dollar

The US Dollar Index gained 0.1% on Monday, extending its advance for a second straight session and reaching a two-month high of 100.17 points.

Strong US labor market data released on Friday reinforced expectations that the Federal Reserve may continue normalizing monetary policy and potentially raise interest rates later this year.

The dollar also received additional support from renewed safe-haven demand as military tensions between Iran and Israel intensified, threatening the fragile ceasefire in the Middle East.

Oil Prices

Global oil prices climbed more than 5% on Monday, resuming their strong rally after a two-day pause and moving toward their highest levels in several weeks.

The gains were driven by renewed fears of supply disruptions in the Middle East following military exchanges between Iran and Israel.

Developments in the Iran conflict

• Iran and Israel exchanged military strikes, putting the fragile Middle East ceasefire at risk.

• Iran’s Revolutionary Guard launched multiple waves of ballistic missiles targeting Israeli positions, including the Ramat military base, in response to strikes on Beirut’s southern suburbs.

• The Israeli military said it intercepted the incoming missiles while activating air raid sirens and raising alert levels at hospitals and schools.

• President Donald Trump held an urgent phone call with Israeli Prime Minister Benjamin Netanyahu, urging restraint and requesting that Israel avoid an immediate response.

• Israeli warplanes later carried out heavy strikes against military targets and sites inside Tehran.

• Trump reportedly informed Israeli officials that Washington was close to reaching a final agreement with Tehran through Pakistani mediation and requested additional time for diplomacy.

• The fragile ceasefire between the United States and Iran has been in effect since early April.

• Trump delivered a direct message to Tehran, saying: “You launched your missiles. That is enough. Return to the negotiating table immediately.”

• Trump also stated that the latest Iranian and Israeli strikes would not derail the broader peace agreement.

US Interest Rates

• Cleveland Federal Reserve President Beth Hammack said on Friday that employment data indicate the labor market is close to full employment, while persistent inflation may require the Federal Reserve to raise interest rates in the near future.

• According to the CME FedWatch Tool, the probability of a Federal Reserve rate hike at the December meeting increased from 47% to 75%.

• Markets continue to price a 99% probability that interest rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate cut stands at just 1%.

• Investors will closely monitor this week’s US economic releases, particularly the May inflation report, for additional clues about the Federal Reserve’s policy outlook.