Bitcoin remained under selling pressure on Tuesday, trading around $62,600 after falling more than 2% in the previous session, as investors continued to pull back from risk assets amid escalating tensions between the United States and Iran.

Market data also pointed to continued weakness in institutional demand after spot Bitcoin exchange-traded funds (ETFs) recorded net outflows of more than $424.66 million on Monday, ending the modest inflow streak that totaled $197.4 million last week.

Markets await US inflation data and Fed chair's testimony

Investors are focused on the release of June US consumer price index data, which is expected to show slower headline inflation due to lower fuel prices, while core inflation will remain the key measure for assessing underlying price pressures.

Markets are also awaiting Federal Reserve Chair Kevin Warsh's testimony before the House Financial Services Committee, which could provide fresh clues on the future path of US interest rates and have a direct impact on the US dollar and risk-sensitive assets, including cryptocurrencies.

Middle East tensions weigh on risk appetite

Investor sentiment deteriorated after military tensions between the United States and Iran intensified. US forces launched a third consecutive night of strikes on Iranian targets, while Iran's Revolutionary Guard responded by attacking US positions in the region. Two Emirati oil tankers were also hit by Iranian missiles while transiting the Strait of Hormuz.

The disruption in the strait and growing concerns over global energy supplies pushed WTI crude above $80 a barrel, while Bitcoin briefly fell below $62,000 before stabilizing near $62,600.

Analysts at Bitfinex said this week's US inflation report will be the market's most important catalyst. They noted that continued moderation in inflation alongside stable interest rates would support Bitcoin and other digital assets, while persistently high energy prices or stubborn core inflation could increase the likelihood of tighter monetary policy and weigh further on cryptocurrencies.

Institutional demand remains weak

Data from SoSoValue showed that spot Bitcoin ETFs recorded net outflows of $424.66 million on Monday, highlighting continued weakness in institutional demand. Analysts believe that if these outflows continue, Bitcoin could face a deeper corrective move in the coming days.

CLARITY Act could be this week's key catalyst

The US House of Representatives is scheduled to hold a hearing on Friday regarding the CLARITY Act as lawmakers continue efforts to establish a comprehensive regulatory framework for the digital asset industry.

US President Donald Trump has urged the Senate to move quickly on the legislation, arguing that it is essential for maintaining US leadership in both digital assets and artificial intelligence amid growing competition from China.

The bill was approved by the House of Representatives on July 17, 2025, with a bipartisan vote of 294 to 134. It also passed the Senate Banking Committee in May 2026 and is now awaiting a final vote.

The legislation aims to clarify the regulatory responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), granting the CFTC oversight of the spot cryptocurrency market. Many market participants view the proposal as a positive step that could support the industry's long-term growth.

Friday's hearing is expected to play a key role in reconciling the House and Senate versions of the bill before Congress begins its recess on August 7, potentially determining whether the legislation can be passed this year.

Oil prices climbed to their highest levels in four weeks on Tuesday after the United States reinstated a naval blockade on Iran, while renewed military confrontations between Washington and Tehran fueled concerns over energy flows through the Strait of Hormuz.

Brent crude futures rose $3.17, or 3.81%, to $86.47 a barrel by 09:41 GMT, their highest level since June 12. US West Texas Intermediate (WTI) crude gained $2.15, or 2.75%, to $80.29 a barrel, its highest level since June 16, the day before the United States and Iran signed a memorandum of understanding to halt the conflict.

Soni Kumari, analyst at ANZ, said markets are repricing the risk of the US-Iran agreement unraveling only weeks after it was signed. She added that while the peak of the military escalation may have passed, continued disruptions could keep oil prices in the $85-$90 per barrel range.

Growing risks to energy supplies

Tensions escalated this week after US President Donald Trump announced the reinstatement of a naval blockade on Iranian shipping and proposed imposing a 20% transit fee on cargo passing through the Strait of Hormuz in exchange for security protection along the waterway.

The Strait of Hormuz is one of the world's most critical energy chokepoints, carrying around 20% of global daily oil and liquefied natural gas supplies before the conflict erupted.

In a separate development, the UAE Ministry of Defence announced that an Indian sailor was killed and eight others were injured after two Emirati oil tankers were struck by Iranian cruise missiles while transiting the strait.

Shipping data also showed that the number of oil tankers passing through the Strait of Hormuz fell to its lowest level in two months over the past day.

Concerns over a prolonged crisis

Citi said in a research note that the likelihood of Iran abandoning its memorandum of understanding with the United States until after the US midterm elections has increased, a scenario that could keep oil prices elevated for longer.

Meanwhile, Iranian Oil Minister Mohsen Paknejad said the country's oil exports continue to flow normally despite the expiration of the temporary US sanctions waiver last week.

Additional geopolitical flashpoints

In Yemen, the Houthi movement said it had launched missiles toward Saudi Arabia, accusing the kingdom of striking an airport under its control.

Simon Wong, portfolio manager at Gabelli Funds, said an expansion of Houthi attacks to include Saudi oil facilities along the Red Sea could create additional uncertainty for regional crude supplies.

In another development, the Ukrainian military announced overnight strikes on two oil refineries in Russia's Bashkortostan and Krasnodar regions, a move that could add further pressure to global energy supplies.

The US dollar edged lower on Tuesday but remained close to its highest level in 13 months as investors awaited the release of US inflation data and Federal Reserve Chair Kevin Warsh's testimony before Congress. Ongoing tensions in the Middle East and higher oil prices have reinforced expectations that monetary policy will remain restrictive.

The United States and Iran exchanged military strikes in the Gulf, while shipping through the Strait of Hormuz came close to a standstill. The disruption pushed oil prices toward $90 a barrel and strengthened expectations that global interest rates could remain higher this year.

Fiona Cincotta, market analyst at City Index, said that persistently elevated core inflation combined with rising oil prices continues to support the US dollar. She added that markets will closely watch Warsh's testimony, as he has generally preferred not to provide explicit guidance on the future path of monetary policy.

Warsh recently warned that anyone expecting the Federal Reserve to become complacent in its fight against inflation "will be disappointed," though he stopped short of signaling the likely direction of upcoming interest rate decisions.

Markets await inflation data

Market pricing currently implies roughly a 20% probability of a Federal Reserve rate hike at the July meeting. That expectation has pushed the yield on the benchmark 10-year US Treasury note above 4.6%, its highest level since May, providing additional support for the dollar.

Federal Reserve Governor Christopher Waller also said interest rates may need to move higher "in the near term" if incoming data shows inflation remains above the central bank's 2% target.

Economists surveyed by Reuters expect annual US inflation to reach 3.8% in June, while core inflation, which excludes food and energy prices, is forecast at 2.8%.

Currency movements

The euro rose 0.2% to $1.1399, while sterling gained 0.2% to $1.337.

Short-term volatility in currency markets also increased, with the one-day implied volatility index for the euro climbing above 10%, signaling stronger demand for protection against sharp exchange-rate swings.

Yen remains under pressure

The Japanese yen rose 0.1% to 162.27 per dollar but remained close to its weakest level in 40 years, keeping markets alert to the possibility of intervention by Japanese authorities to support the currency.

The move followed comments from Japanese Finance Minister Satsuki Katayama, who said the government may consider adjusting the asset allocation of state pension funds if investment conditions change significantly.

Health Minister Kenichiro Ueno also said the government would review the asset allocation of the Government Pension Investment Fund if necessary, although he ruled out any immediate changes.

Masafumi Yamamoto, Chief Currency Strategist at Mizuho Securities, said any sustained support for the yen would require a swift decision to increase the share of domestic assets in the pension fund's portfolio by at least five percentage points for both equities and bonds. He warned that only limited or gradual adjustments would have little impact on the Japanese currency.

Gold prices rose in European trading on Tuesday, holding above the two-week low reached earlier in the Asian session and heading for their first gain in three days, supported by bargain buying and a pause in the US dollar's advance against a basket of global currencies.

Federal Reserve Governor Christopher Waller said interest rates may need to rise if key June inflation data, due later on Tuesday, comes in stronger than expected.

The Price

• Gold prices rose 0.8% to $4,034.17 an ounce, from the opening level of $4,002.12, after touching a low of $3,983.64, the weakest level since July 1.

• At Monday's settlement, gold prices fell 2.9%, posting their second consecutive daily loss, pressured by a stronger dollar and higher oil prices as military tensions between the United States and Iran escalated.

US dollar

The dollar index fell around 0.25% on Tuesday, retreating from a two-week high of 101.33 and reflecting a pause in the US currency's advance against a basket of major and minor currencies.

As is widely known, a weaker US dollar makes dollar-denominated gold more attractive to buyers holding other currencies.

In addition to profit-taking, the dollar weakened as investors refrained from building new long positions ahead of the release of key US inflation data for June, which could provide crucial clues on whether the Federal Reserve will raise interest rates this year.

Global oil prices

Oil prices rose more than 3% on Tuesday, extending gains for a second consecutive session and reaching their highest level in a month as military strikes between the United States and Iran continued to intensify around the Strait of Hormuz.

Higher global oil prices are renewing concerns over accelerating inflation, which could prompt central banks around the world to raise interest rates in the near term.

Latest developments in the Iran conflict

• US forces carried out an intensive five-hour bombing campaign targeting Islamic Revolutionary Guard Corps military sites in several Iranian cities.

• US President Donald Trump proposed imposing a 20% tariff on goods transiting the Strait of Hormuz and reinstating the blockade on Iran.

• US Central Command officially announced that it would resume the naval blockade of vessels traveling to and from Iranian ports at 4:00 p.m. ET on Tuesday.

• Iran's Revolutionary Guard announced the launch of additional missiles and drones against US bases in several Gulf states, while also targeting oil tankers attempting to transit the Strait of Hormuz.

US interest rates

• Federal Reserve Governor Christopher Waller said on Monday that the US central bank may need to raise interest rates "in the near term" if incoming data shows inflation remains well above the 2% target.

• Following those remarks, CME Group's FedWatch tool showed that the probability of the Federal Reserve leaving rates unchanged at its July meeting fell from 68% to 59%, while the probability of a 25-basis-point rate hike rose from 32% to 41%.

• The probability of the Fed keeping rates unchanged at its December meeting also fell from 24% to 10%, while the probability of a 25-basis-point hike increased from 76% to 90%.

• Investors are awaiting the release of key US inflation data for June later on Tuesday to reassess those expectations.

Kevin Warsh

At 14:00 GMT, new Federal Reserve Chair Kevin Warsh will deliver his first semiannual testimony before the House Financial Services Committee in Washington, DC.

Gold outlook

Financial markets strategist Ilya Spivak said markets may be reluctant to make decisive moves given the wide range of potential risks.

Spivak added that investors will be watching both Warsh's testimony and the consumer price index data, alongside developments in the Middle East.

SPDR fund

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were little changed on Monday at 1,002.45 metric tons, the lowest level since July 2.