Bitcoin failed to maintain momentum above $67,000 as escalating tensions between the United States (US) and Iran heightened concerns about rising oil prices and global inflation.
At the time of writing, Bitcoin was at $66,473, down 0.05% since it opened early Wednesday in Asian trading.
Although still up around 1.8%, investors were seen taking profits after market sentiment turned more cautious.
Previously, the crypto market received support from the positive development of the Digital Asset Market Clarity Act (CLARITY Act) in the US.
The bill is expected to create a clearer regulatory framework for the digital asset industry, thus increasing investor confidence.
In addition, the Spot Bitcoin ETF in the US continued to record fund inflows when it received a net investment of $227 million on July 20.
It was the fifth consecutive day of positive inflows, reflecting continued strong institutional demand for Bitcoin.
The bullish momentum was also supported by short liquidations, which forced traders to buy back Bitcoin and accelerate the price increase.
However, a large-scale derivative transaction later caused the price to briefly retreat before stabilizing.
At the same time, US crude oil prices jumped to around $84.70 per barrel on concerns about supply disruptions following the US-Iran conflict.
The rise in oil prices increases inflation risks and could reduce the Federal Reserve's (Fed) room to cut interest rates in the near future, thus putting pressure on risky assets such as Bitcoin.
From a technical perspective, the main resistance zone is currently between $67,000 and $67,800.
A close above this level could potentially open the way to $69,500 before testing the psychological level of $70,000.
Conversely, a failure to hold support around $64,000 could trigger a price correction in the short term.
For now, the direction of Bitcoin is expected to continue to be influenced by geopolitical developments, oil price movements and institutional fund inflows into Spot Bitcoin ETFs.
