Most cryptocurrencies declined on Wednesday as tensions intensified in the Middle East and investors awaited key US economic data that could strengthen expectations of a Federal Reserve rate hike rather than a rate cut, amid inflationary pressures linked to the ongoing conflict.

As of 21:33 GMT, Ethereum was down 5.9% on CoinMarketCap, trading at $1,801.4.

Middle East developments

Iran launched ballistic missiles toward neighboring countries in the region, including Kuwait and Bahrain, resulting in one death and dozens of injuries, according to Kuwaiti authorities and state media. Meanwhile, US forces carried out strikes on Iran’s Qeshm Island.

Bob Yawger, director of energy futures at Mizuho, said the prospects for a ceasefire appear to be fading, adding that the current trajectory points toward further deterioration.

US President Donald Trump stated that negotiations are still ongoing. However, Iran’s semi-official Tasnim News Agency reported on Wednesday that Tehran has not responded to the United States in recent days and that indirect communications through mediators have been suspended until Iran’s conditions regarding a halt to fighting in Lebanon are met.

Israel continues its largest military incursion into Lebanon in 25 years, in a conflict that has been ongoing since March 2, when Hezbollah opened fire in support of Iran.

In a podcast interview published Wednesday, Trump said Iran had agreed not to possess nuclear weapons and that Supreme Leader Ayatollah Mojtaba Khamenei is participating in the negotiations.

The Fed and inflation

Federal Reserve Chair Kevin Warsh pledged on Tuesday to follow the “best traditions of the Federal Reserve” in his opening remarks at the start of his four-year term, while also promising a comprehensive review of potential reforms going forward.

Meanwhile, Cleveland Fed President Beth Hammack said the US central bank may soon need to raise interest rates if already elevated inflationary pressures continue to intensify.

Markets are also focused on Friday’s US nonfarm payrolls report for May, which could provide further clues about the future direction of Federal Reserve monetary policy.

The ADP National Employment Report showed that US private-sector employment increased by more than expected in May.

India’s LNG imports are rising sharply even as Asian natural gas prices remain at their highest levels in years, a trend that runs counter to the broader regional pattern, where elevated prices have pushed many countries to reduce demand, switch to coal and nuclear power, and implement energy-saving measures.

After Qatar halted natural gas production on March 2 and the Strait of Hormuz was effectively closed around the same time, Asia lost between 5.5 million and 6 million tonnes of LNG supply per month, equivalent to roughly one-quarter of regional export flows before the crisis.

Asian LNG imports fell to 18.8 million tonnes in April, the lowest level since 2020, while Asian gas prices surged from $10.4 per million British thermal units before the crisis to $25.3 by late March.

South Korea reduced its LNG imports by around 1 million tonnes per month between February and April, while Japan cut purchases by 1.5 million tonnes per month over the same period.

India, however, moved in the opposite direction. After imports declined from 1.9 million tonnes in February to 1.67 million tonnes in March, they rebounded to 2.1 million tonnes in May.

The recovery is particularly notable because India lost its most important traditional supplier. Qatar accounted for 11.2 million tonnes of India’s 25 million tonnes of LNG imports in 2025, representing roughly 45% of total imports and making it by far India’s largest supplier.

With Qatari LNG largely disappearing from India’s import flows, New Delhi moved to replace lost volumes with cargoes from Oman, Nigeria, and the United States.

US LNG exports to India increased more than sixfold, rising from 137,000 tonnes in January to 907,000 tonnes in May, making the United States India’s largest LNG supplier.

Nigeria also doubled monthly shipments to 480,000 tonnes in May, while Oman averaged roughly 500,000 tonnes per month during March and April before easing to 300,000 tonnes in May.

Weather, not structural demand, is driving the surge

India’s renewed appetite for LNG is not being driven by structural growth in gas demand but rather by extreme weather conditions.

Electricity consumption jumped more than 11% year-on-year to 164.98 billion kilowatt-hours in May 2026 as temperatures exceeded 45°C across large parts of the country, making air conditioners and desert coolers essential.

Peak electricity demand reached record highs on four consecutive days between May 17 and May 21, culminating in an all-time high of 270.82 gigawatts on May 21, surpassing the previous record of 250 gigawatts set in May 2024.

The heatwave exposed a key weakness in India’s rapidly evolving renewable-energy system. The country now has abundant solar generation during daylight hours but lacks sufficient storage capacity after sunset.

India’s installed solar capacity has expanded rapidly, reaching 154.2 gigawatts by April 2026.

This growth reflects a range of government initiatives, including rooftop solar incentives, large-scale solar parks, and support for domestic solar panel manufacturing.

The result is that daytime electricity prices often approach zero when solar generation is abundant.

However, battery and storage infrastructure has not kept pace. Excess solar power generated during the day cannot be stored efficiently to meet evening and overnight demand.

As temperatures remain elevated after sunset, cooling demand stays high, causing electricity prices to spike.

On May 21, the day of record electricity demand, India faced a nighttime power shortfall of 2.5 gigawatts.

LNG becomes an emergency solution despite high costs

At precisely these moments, LNG-fired power generation is brought online despite its poor economics.

In early April, India’s Ministry of Power instructed all gas-fired power plants to prepare for operation during electricity shortages linked to heatwaves.

Much of India’s gas-fired generation fleet had been idle for commercial reasons, as the country remains a major coal producer and has long relied on domestic coal for power generation.

Coal alone supplies roughly two-thirds of electricity demand, while thermal generation accounted for about 71% of power production in May, most of it from coal-fired plants.

Gas-fired generation contributes only around 10 gigawatts during peak periods, despite having available capacity of roughly 20 gigawatts. This represents about 4% of installed capacity and roughly 1.5% of actual electricity output.

Power shortages typically occur at the margins rather than throughout the day, making gas valuable despite its high cost.

Gas plants can be activated for short evening periods, unlike coal plants, which are better suited for continuous baseload generation.

Although Asian gas prices remain near $18 per million British thermal units, making gas-fired generation largely uneconomic, government arrangements allow Grid India to schedule gas plant operations several days in advance, effectively using them as emergency reserve capacity.

Coal and hydropower are not enough

Coal plants cannot resolve all bottlenecks because they are already carrying most of the load, while about 2.1 gigawatts of coal-fired capacity is currently unavailable due to maintenance and outages.

Other facilities also face logistical constraints and limitations on how quickly output can be increased.

Imported-coal plants, many of which are located along the coast and typically operate at low utilization rates outside peak-demand seasons, have already increased production. As a result, India usually sees a seasonal rise in coal imports during late spring and summer.

Hydropower, another flexible generation source, faces a timing problem.

Large hydropower facilities account for around 51 gigawatts, or roughly 10% of installed capacity, and can ramp output more quickly than coal or gas without fuel costs.

However, India is currently in the pre-monsoon period, when reservoirs have already been partially depleted.

On May 30, hydropower generation stood at 15 gigawatts, about 18% below the target set by the Central Electricity Authority.

Normally, the monsoon season—which provides roughly 70% of annual rainfall—would replenish reservoirs and help ease the strain on the power system.

This year may be different.

A developing Super El Niño event is expected to weaken the monsoon, potentially resulting in the lowest rainfall levels in 11 years and delaying the onset of rains until late June.

Lower rainfall would prolong high temperatures and increase concerns that electricity shortages could persist for an extended period.

LNG becomes the fuel of the summer power crisis

All of this leaves LNG as the marginal fuel supporting India’s summer electricity system.

In theory, India could double gas-fired generation from the current 10 gigawatts to around 20 gigawatts.

With temperatures over the past two months running roughly two degrees Celsius above seasonal averages, LNG purchases could remain elevated throughout June and July.

The irony is that India is importing more LNG not because gas has become cheaper, but because alternative options face severe constraints.

Across most of Asia, high LNG prices are destroying demand. In India, however, extreme heat, the gap between solar generation and storage capacity, and the need for reliable nighttime electricity are keeping gas demand alive.

Until New Delhi develops sufficient storage capacity to support its solar boom, it is likely to continue buying expensive LNG to get through India’s hot and dark summer nights.

Copper prices continue to climb steadily as supply pressures that have been anticipated for years are beginning to emerge across the global market.

According to the report’s author, copper remains “the simplest investment idea in the market,” arguing that current developments are unfolding exactly as expected. The world, the report says, does not have enough copper to meet the surge in demand expected from the expansion of artificial intelligence applications and the global energy transition.

At the same time, developing a new copper mine typically takes more than a decade, while the pipeline of new mining projects is becoming increasingly limited. As a result, any supply shortage can only be resolved through higher prices, followed later by the substitution of copper with aluminum in lower-value applications.

Front-month US copper futures are currently trading at $6.65 per pound, approaching the record high reached last month.

The report notes that US copper prices continue to trade at a premium to global markets due to US tariff policies. On the London Metal Exchange, three-month copper is trading around $13,600 per metric ton, implying a premium of roughly 6% in the US market.

The United States is expected to make a final decision on copper import tariffs by the end of July, with markets already beginning to price in the potential outcome.

Citigroup and Goldman Sachs raise copper forecasts

Citigroup has turned bullish on copper, stating that uncertainty surrounding US tariffs, combined with hopes for the reopening of the Strait of Hormuz later this summer, could push prices significantly higher.

The bank’s analysts expect copper to reach $15,000 per metric ton within the next year.

“We expect continued strategic ambiguity from US policymakers rather than a clear and definitive announcement regarding tariffs,” Citigroup analysts said. “We believe the US administration will refrain from imposing tariffs on refined copper, but will stop short of confirming that explicitly in order to encourage continued stockpiling of excess copper inventories within the United States.”

Similarly, Goldman Sachs raised its year-end copper target on Monday to $13,735 per metric ton, up from its previous forecast of $12,465.

War with Iran and supply risks

At the start of the conflict with Iran, there were concerns that higher oil prices and geopolitical tensions would weaken copper demand, but that has not materialized so far.

However, the report warns of a new threat to the copper market in the form of sulfur shortages, as a significant portion of global sulfur shipments passes through the Strait of Hormuz, which remains closed.

Sulfur is a critical component in copper production. Any disruption to supply could rapidly increase production costs and prices, potentially slowing mine output over time.

Morgan Stanley also sees copper reaching $15,000

Morgan Stanley has likewise projected copper prices reaching $15,000 per metric ton, noting that the metal is already trading near record highs while long positions on the COMEX exchange have reached unprecedented levels.

“Although copper is already trading near historical highs and net long positions on COMEX are at record levels, we believe any pullbacks will be short-lived given escalating supply disruptions, continued strength in US imports, and signs that China is rebuilding inventories during price declines,” the bank said.

Morgan Stanley added that the upcoming US tariff decision remains the market’s key catalyst, although the current price spread between COMEX and the London Metal Exchange is already encouraging copper shipments into the United States.

The bank also noted that any decision by Washington to increase tariffs could further accelerate the rally.

Copper mining stocks benefit from the rally

The report concludes by arguing that copper mining stocks remain the best way to gain exposure to the metal, highlighting that the COPX copper miners ETF rose 3.4% during the session and is approaching the upper end of its current trading range.

Bitcoin fell to an intraday low of $65,710 on June 3, 2026, after dropping more than 6% over the past 24 hours, pressured by massive outflows from spot Bitcoin exchange-traded funds ranging between $2.8 billion and $3.5 billion, as well as a Bitcoin sale by Strategy, one of the cryptocurrency’s most prominent institutional buyers since 2020.

The selling pressure triggered $1.8 billion in liquidations within a single day, the highest level since February 2026, with long positions accounting for approximately $1.35 billion of the total liquidations.

The move pushed Bitcoin to its lowest level in several weeks, placing the cryptocurrency near the key technical support level of $65,000, which traders view as a critical threshold before a potential test of the $60,000 level.

Unlike previous sharp ETF outflow episodes, the current streak of withdrawals has persisted for 10 to 11 consecutive days, reflecting broad institutional selling that has gradually weakened market conditions.

Record ETF outflows

Total net outflows from US spot Bitcoin ETFs reached between $2.8 billion and $3.5 billion over a period of 10 to 11 consecutive redemption sessions.

This marks the longest streak of withdrawals since the launch of these funds in January 2024 and has pushed year-to-date flows into negative territory.

Simultaneous redemptions from major funds such as iShares Bitcoin Trust, Fidelity’s FBTC, Grayscale’s GBTC, and ARKB suggest a broad institutional risk-reduction strategy rather than issues specific to any individual fund.

The iShares Bitcoin Trust, which holds the largest share of assets among US spot Bitcoin ETFs, has typically recorded the largest dollar-denominated outflows during such periods.

The trend has also appeared globally, with European crypto investment products recording approximately $1.67 billion in outflows during the week of May 25–29, highlighting a broader reassessment of institutional exposure to digital assets.

Strategy sale raises concerns about the future of its holding strategy

Meanwhile, Strategy’s recent sale of 32 Bitcoin at an average price of roughly $77,135, generating about $2.5 million, represented less than 0.004% of the company’s $60 billion Bitcoin reserve.

Despite the small size of the transaction, its impact on market sentiment was significant.

Since 2020, Strategy has been one of Bitcoin’s strongest corporate supporters through continuous accumulation. However, the shift toward selling—particularly following comments by Michael Saylor about the possibility of liquidating a portion of holdings to fund dividend payments—introduced a new layer of uncertainty into the market.

Following the news, Strategy shares fell about 6% amid concerns that the company’s long-standing “never sell” philosophy may be weakening, potentially increasing future Bitcoin supply.

Market participants believe that perception contributed to Bitcoin’s accelerated decline toward the $65,710 level, as the transaction was viewed as a possible signal of future actions involving the company’s cryptocurrency reserves.