Bitcoin slides more than 2% as Iran-US tensions escalate

Bitcoin fell more than 2% on Tuesday as attacks between the United States and Iran escalated. Bitcoin recently traded at $77,363. Bitcoin had risen to nearly $81,282 on Friday. Bitcoin initially did not react strongly to President Donald Trump's threats against Iran or the first strikes. Trump said the U.S. attacks followed Iran's attempt to place mines in the Strait of Hormuz. Trump also cited an attack on a U.S. military base in Jordan. U.S. Central Command said Iran had attacked commercial ships. Iranian media said Iran responded with an operation against U.S. military bases. Oil prices surged after the reports. Bitcoin has been sensitive to geopolitical tensions this year. Bitcoin has faced downward pressure after war news and later rallied when Trump raised hopes of a ceasefire. Bitcoin has made larger price swings since mid-August. Higher oil prices can increase inflation. Higher inflation can delay U.S. interest-rate cuts and restrict liquidity available to bitcoin. Federal Reserve Chair Kevin Warsh said last week that inflation in the United States had not fallen enough. Traders no longer price in an interest-rate cut this year and instead expect a rate increase. Bitcoin has typically performed well during periods of low interest rates. Bitcoin also had one of its strongest runs in August after the U.S. Treasury said it would at least double its liquidity-support buyback operations. The Treasury announcement weakened the dollar. Non-yielding assets such as bitcoin and gold benefited.