Bitcoin Breaks Below $66,000 as China Crackdown, Mideast Tensions and ETF Outflows Weigh

Bitcoin fell through the $66,000 level as tighter regulation in China, geopolitical tensions in the Middle East and institutional fund outflows combined to pressure the market.

According to data from Binance's Tether market on June 2, Bitcoin sank about 5% from a day earlier to as low as $65,426. It was the first time the cryptocurrency had fallen below $66,000 since March 29, roughly two months ago.

Tensions between the US and Iran added to pressure across risk assets by driving up oil prices. The two countries had been expected to agree to extend a ceasefire and resume nuclear talks. But fears of a breakdown in negotiations grew after President Donald Trump demanded revisions to provisions related to Iran's nuclear program and the Strait of Hormuz, prompting a backlash from Tehran.

Secretary of State Marco Rubio told a congressional hearing the same day that any sanctions relief under discussion with Iran was conditional. Iran would be compensated only if it gave up the nuclear program that led to sanctions in the first place, he said. Rubio added that sanctions could be lifted in line with US commitments only if Iran agreed to halt nuclear activities, including highly enriched uranium, reaffirming Washington's hard-line stance.

Within the crypto market, tighter regulation from China dealt a direct blow. Chinese authorities moved to crack down on and sanction offshore brokerages Tiger Brokers and Futu, triggering a large-scale withdrawal of China-linked funds that had entered through indirect channels. Chinese investors had opened accounts in Hong Kong to bypass restrictions on virtual-asset trading, then used VPNs to access Hong Kong apps to trade Bitcoin and Ether directly or buy spot ETFs. That route for capital inflows has now been completely shut off.

News of Strategy's sale added to the souring sentiment. The company sold 32 Bitcoin last week at an average price of $77,135. It marked the first time in the company's history that it had sold part of its holdings after adhering to an aggressive buying and long-term holding strategy. Strategy shares fell more than 6% in New York premarket trading immediately after the sale was reported. While the amount sold was small, the fact that a company seen as a symbol of Bitcoin's rise had turned seller fueled concern over additional supply coming to market.

Accelerating institutional outflows added to the downward pressure. Data from SoSoValue showed that US spot Bitcoin ETFs recorded net outflows of $519.19 million on that day alone. That marked a 12th straight trading session of net outflows. About $4 billion has left the market over that period.