Live updates: Bitcoin holds near $66,000 as stocks claw back from big early decline

Bitcoin slipped below $66,000 on Wednesday as rising oil prices and concerns about U.S.-Iran tensions weighed on risk markets. The threat of retaliation by former President Trump against Iran following attacks near the Strait of Hormuz has contributed to a surge in West Texas Intermediate crude oil prices, which rose 3.2% to $87.38 per barrel, the highest since early June. This spike in oil has fueled inflation fears, pushing U.S. Treasury yields higher and increasing expectations for a Federal Reserve rate hike at the upcoming policy meeting, thereby pressuring stocks and cryptocurrencies.

Analysts highlighted that bitcoin's direction depends largely on three factors: the U.S.-Iran conflict, overall risk appetite amid earnings season, and Fed policy. Market observers are watching the $63,000 level for bitcoin as a key support point which, if held, could stabilize recent price corrections. On the upside, reclaiming the $65,000 to $66,000 range might signal renewed momentum toward recent highs. After having climbed to nearly $67,000 on Tuesday, bitcoin moderated its gains amid cautious sentiment ahead of Alphabet’s earnings report, which investors view as a test of the ROI on massive AI-related capital spending.

In the broader tech sector, while companies like Alphabet are expected to demonstrate returns on their substantial AI investments, Tesla's story differs. The automaker’s stock has declined by 16% this year, and contrary to other tech giants, investors appear to favor increased AI and capital expenditures for Tesla to potentially boost its valuation. Meanwhile, bitcoin ETFs in the U.S. have posted six consecutive days of net inflows, totaling $203 million on Tuesday alone, marking the longest streak in three months. Total ETF assets are nearing $81 billion, though inflows remain below the previous large outflows seen in late June.

Overall, the crypto market’s recent movements are closely linked to shifts in risk sentiment driven by geopolitical tensions, inflation expectations, AI investment news, and upcoming central bank decisions. The interplay of these factors continues to create a cautious trading environment for bitcoin and related assets.