Bitcoin prices fell on Monday after global oil prices surged on renewed tensions between the United States and Iran.
At the time of writing, Bitcoin was at $62,432, down 0.04% since it opened early Tuesday in Asian trading.
Market sentiment turned negative as investors worried that rising energy costs could lead to a return to inflation.
Bitcoin fell as much as 3.8% to around $61,761 before paring some losses.
The decline also brought Bitcoin back below its 200-week moving average, a technical indicator often watched by investors.
Ethereum also took a hit, falling as much as 3.9% in the same session.
FxPro analyst Alex Kuptsikevich said the 200-week level has often been a good area for long-term investors to start accumulating Bitcoin gradually.
However, he warned that the current market conditions are still uncertain and do not guarantee a price recovery in the near future.
The surge in oil prices came after the conflict between the United States and Iran escalated.
Concerns about disruptions to oil supplies through the Strait of Hormuz pushed oil prices to their biggest increase since April.
Higher oil prices could increase inflationary pressures as transportation and production costs become more expensive.
This situation could cause the United States Federal Reserve (Fed) to maintain or raise interest rates for longer than expected.
The market is now paying attention to the US Consumer Price Index (CPI) data as well as the Fed Chairman's statement this week.
Higher-than-expected inflation readings could potentially increase expectations for interest rate hikes, thus putting pressure on risky assets such as Bitcoin.
Although market sentiment remains cautious, there was a positive development when the Bitcoin ETF in the United States recorded a net inflow of $197 million for the week ending July 10.
The inflow ended eight consecutive weeks of fund withdrawals and showed that institutional investors are once again increasing their holdings of Bitcoin.
These developments are seen as helping to reduce selling pressure in the crypto market, but the direction of Bitcoin's price in the short term still depends largely on oil price movements, US inflation data and the Fed's interest rate policy.
