Bitcoin faced renewed selling pressure on Thursday as a combination of geopolitical uncertainty, rising bond yields, and setbacks surrounding crypto legislation weighed on investor sentiment. The decline came as oil prices climbed higher and market expectations for the Clarity Act weakened.
Bitcoin traded around $65,500, down approximately 0.7% since the start of the UTC session, extending its retreat from a Wednesday high near $66,700. The broader cryptocurrency market followed the decline, with major tokens including Ether, Solana, and XRP also recording losses.
Energy markets added to inflation concerns, with West Texas Intermediate crude futures on the NYMEX rising to $88.60 per barrel, marking their highest level since June 11. Oil’s latest rally represents a sharp rebound from recent prices below $70 and has increased fears that another surge in energy costs could push inflation higher worldwide.
Higher inflation risks could complicate central banks’ plans to reduce interest rates, creating additional challenges for markets that rely on lower borrowing costs.
Treasury markets reacted to the shift in expectations, with the U.S. two-year yield climbing to 4.31%, its highest level since February 2025. The benchmark 10-year Treasury yield also advanced to 4.66%, reaching its strongest level since May, based on TradingView data.
Rising yields often weigh on assets that do not generate income, including Bitcoin and gold, as investors may prefer bonds offering more competitive returns. The move has encouraged some traders to reduce exposure to higher-risk assets in favor of fixed-income investments.
Market caution increased further after reports that the U.S. military deployed a B-1 long-range bomber on Tuesday to conduct strikes against targets connected to Iran’s Islamic Revolutionary Guard Corps. The deployment suggested a possible escalation in U.S. military involvement and raised concerns about a broader regional conflict.
Crypto markets also faced regulatory uncertainty after several influential Senate Democrats argued that the latest version of the Digital Asset Market Clarity Act does not go far enough on ethics rules and other key protections.
The criticism quickly affected prediction markets, with Polymarket traders cutting the implied odds of the Clarity Act becoming law from 46% to 38%.
Senate Republicans released an updated draft of the legislation on Wednesday, including an ethics provision that had received backing from the White House and President Donald Trump. Senator Bernie Moreno praised the measure, calling it one of the strongest ethics proposals in U.S. legislative history.
