Bitcoin's price declined on Tuesday as cryptocurrencies were caught in broader market volatility ahead of a deadline set by former U.S. President Donald Trump for Iran. The leading cryptocurrency fell by as much as 2.2%, trading around $68,460 at the time of reporting. This drop erased gains from the previous day, when Bitcoin had briefly surpassed $70,000 for the first time since March. Other digital assets also retreated, with the second-largest token, Ether, falling up to 2.8%.

Global stock markets fluctuated ahead of Trump’s Tuesday deadline, in which he threatened to bomb Iran’s civilian infrastructure unless the Strait of Hormuz was reopened. S&P 500 futures dropped 0.4%. According to Rachel Lucas, an analyst at BTC Markets, Bitcoin sentiment "remains bearish in the near to medium term." She added that the market is in a wait-and-see mode, with "bulls lacking enough conviction to sustain a breakout and bears unable to force a decisive breakdown."

Rising risks of an escalated conflict with Iran, following reports that Tehran rejected a ceasefire proposal, have largely kept investors on the sidelines. Trump stated that reopening the critical trade route—the Strait of Hormuz—would be part of any agreement to end the war. Oil prices have surged significantly since the conflict began. Brent crude rose on Tuesday, extending a roughly 50% gain since the fighting broke out in late February. Gold was largely flat on the day and has fallen more than 10% since the start of the war.

In contrast, Bitcoin has shown relative resilience, with signs that institutional selling pressure is easing. U.S.-listed spot Bitcoin ETFs recorded net inflows of $471.3 million on Monday, following inflows of $22.3 million the previous week. Since early March, Bitcoin has largely traded between $65,000 and $75,000. Cryptocurrency trading has remained subdued since a sharp selloff last October.

Traders are now watching for an end to the war and new U.S. cryptocurrency legislation as potential catalysts for a digital asset rally. Lucas noted, "A bullish scenario depends on two catalysts: a confirmed and sustained U.S.-Iran ceasefire that brings oil prices below $100, and the anticipated passage of the U.S. Clarity Act in late April. Institutional market participants are closely monitoring the bill as a potential regulatory breakthrough."