Bitcoin posted a small recovery early in the week after a sharp drop on Sunday, as global geopolitical tensions pushed investors away from risky assets and into safe havens like gold. The fragile market sentiment has caused crypto price movements to remain volatile despite a few rebounds.
The largest cryptocurrency fell as much as 3.5% on Sunday to a new 2026 low, before paring some of those losses. Although the price has rebounded by around 1.6% in the past 24 hours, Bitcoin is still trading near its lows, while Ethereum remains near its lowest level since mid-December.
The pressure on Bitcoin comes in a macro environment that clearly favors gold and other commodities. Gold’s rally to new highs, as the US dollar fell to its lowest level in months, reflects investors’ tendency to seek protection amid global uncertainty.
Although often promoted as “digital gold” and a hedge against inflation, Bitcoin has failed to match the appeal of gold in the current market environment. Fund outflows from Bitcoin spot ETFs in the United States also added to the pressure, as institutional investors reduced exposure to crypto assets.
Geopolitical tensions, including President Donald Trump’s threat of new trade tariffs, the US military’s move towards Iran and concerns about a US government shutdown, continue to weigh on global market sentiment. At the same time, concerns over Japanese intervention in currency markets and military developments in China have also added to investor uncertainty.
Market attention now turns to the US Federal Reserve’s interest rate decision and press conference scheduled for this week. With US inflation still above target, investors will be watching for any signs that the Fed sees room for a slowdown in inflation and a potential interest rate cut in the second half of the year, which could have a major impact on the direction of Bitcoin and other risk assets.
