Encryption Weekly: Geopolitical Tensions Rise, Bitcoin Faces Downward Pressure

This week, the encryption asset market experienced a complex interplay of multiple factors. Bitcoin fluctuated in the range of $102,000 to $109,000, briefly dipping due to geopolitical risks over the weekend before partially recovering.

The internal structure of the encryption market remains relatively stable, becoming an important force supporting prices. However, escalating geopolitical conflicts have led short-term traders to price Bitcoin downwards. Future trends will largely depend on the development of the regional situation. If the conflict gradually eases, Bitcoin is expected to return to around $105,000.

Policies, Macroeconomic Finance and Economic Data

This week, the situation in the Middle East has shown a spiral escalation.

From June 16 to 18, Israel conducted precise airstrikes on targets within Iran, which Iran subsequently retaliated against with missiles and drones. The market immediately entered a defensive mode: Brent crude oil rose nearly 7% that week, briefly surpassing $78; gold also increased, reaching a high of $33,452.37 per ounce.

On June 19, the White House publicly stated for the first time that it is "evaluating military options," marking the beginning of the United States' open involvement. On the same day, Brent crude oil futures rose by 2.8%, reaching $78.85, a new five-month high; the VIX volatility index increased, and U.S. Treasury yields fell as investors sought safety.

On June 20, the market briefly calmed down, but this was soon shattered. In the early hours of June 21, the United States carried out precision bombings on three nuclear facilities in Iran. This move triggered severe diplomatic turmoil. Iran vowed to retaliate and hinted at possible actions in the Strait of Hormuz.

Due to the event occurring over the weekend, the response of mainstream financial markets remains to be seen. However, derivatives and offshore trading have already given signals: energy and military industry ETFs rose in night trading; high strike price transactions of crude oil options saw increased volume; while high-risk assets were the first to come under pressure, with Bitcoin falling about 1.14% and Ethereum dropping more than 2.96%.

If the conflict escalates further, it could lead to a repricing of global assets. Historical data shows that Bitcoin often retreats first at the onset of geopolitical crises, then recovers with a weak negative correlation to gold. However, if the conflict affects global liquidity, the volatility of Bitcoin and Ethereum may significantly amplify.

Encryption Market

This week, crypto assets have experienced multiple influences including institutional funding support, rising derivative risks, and escalating geopolitical risks. Bitcoin continues to fluctuate in the range of 102000-109000 USD, briefly dipping over the weekend due to geopolitical tensions before partially recovering.

At the beginning of the week, the market's expectation of a "controllable" situation led to a slight rebound, with Bitcoin reaching a high of $109,000. Institutional capital inflow has become a key support.

Subsequently, the Federal Reserve's decision to keep interest rates unchanged did not disrupt the Bitcoin trend, but the hedging scale in the futures market increased. On Friday, there was a large outflow from Ethereum ETFs, triggering a chain reaction that led to a pullback in other encryption assets.

On June 20th during the US stock market session, a round of high-leverage liquidations caused Bitcoin to quickly drop below $103,000, with assets like Ethereum seeing declines of 6-9%. This "flash crash" event highlights the vulnerability of the derivatives market.

Over the weekend, the U.S. strikes on Iranian facilities triggered a new round of volatility. Bitcoin briefly fell below $100,000, but the decline was relatively limited; Ethereum continued to drop, indicating fragile liquidity for high-risk assets.

From a technical perspective, geopolitical conflicts have caused Bitcoin to temporarily fall below the first ascending trend line, but it is still operating within the $90,000-$110,000 range. The internal market structure and capital support are generally stable, and this week's decline is mainly due to panic sentiment. If the situation eases, Bitcoin is expected to return to $105,000; if the conflict escalates, it may test the support levels of $100,000 and $90,000.

Capital Flow

After a significant rise in the early stage, capital inflow has shown divergence. The funds in the stablecoin channel have weakened, while the funds for the Bitcoin spot ETF remain relatively stable.

This week, Bitcoin spot ETF saw a net inflow of $1.022 billion, a decrease from last week's $1.384 billion, but still maintains a high level. However, if geopolitical situations continue to affect U.S. stocks, this data may face challenges.

In terms of stablecoins, there was a net outflow of $132 million this week, consistent with trends in the futures and lending markets. The Ethereum spot ETF saw a net inflow of $40.77 million this week, but there was an outflow of over $100 million on Friday. The reduced inflow of funds may put pressure on high-risk assets.

Market Positions

Against the backdrop of delayed interest rate cut expectations and rising geopolitical risks, Bitcoin prices remain high, primarily supported by institutional allocation and the internal structure of the market.

This week, long positions increased by 28,920 coins, while short positions decreased by 24,650 coins, and the exchange inventory continued to decline. Due to panic selling and weakened speculative enthusiasm, the outflow from exchanges significantly reduced to 1,555.9 coins.

These data indicate that long-term investor confidence is strengthening, while short-term trading enthusiasm is cooling down. The short-term trend of Bitcoin will be determined by both on-site traders and ETF funds. If regional tensions ease, Bitcoin may return to $105,000; if the situation worsens, it could drop below $100,000 and even test the $90,000 support (lower probability).

Unless the conflict escalates into a regional war, the long-term trend logic of Bitcoin has not changed.

Cycle Indicator

According to eMerge Engine data, the EMC BTC cycle indicator is 0.625, indicating an upward trend.