Bitcoin traded sideways at 104,000, and ETF attracted 1 billion in a week! The war in the Middle East and the Federal Reserve suppress the crypto recovery

Gate News, since the outbreak of the Israel-Iran conflict, Bitcoin has fallen 3% to 104,000, and Ethereum has fallen 10%! Geopolitical risks are superimposed on the hawkish Federal Reserve, the crypto market is walking on thin ice, can the ETF billion dip turn the tide? Look at how the options market "buys insurance". Check out the latest analysis:

This week, the crypto market experienced a drastic fluctuation triggered by geopolitical tensions. Since the outbreak of conflict between Israel and Iran on June 3, the Bitcoin price has fallen by about 3%, currently hovering above the $104,000 key threshold; while the Ethereum market is even worse, plummeting nearly 10% to the $2,500 level. Coinglass data shows that the current Fear & Greed Index is 48, which is at a neutral level.

Although in the past 24 hours, the two leading cryptocurrencies seem to have fallen into the "calm before the storm", showing a sideways "wait-and-see" situation, but the nerves of traders dare not relax at all. Markets are being dragged down by escalating tensions in the Middle East and the flow of money from the US Bitcoin ETF.

Geopolitical storm swept the crypto market into a "frightened bird"

• Escalation of Conflict Triggers Panic: The direct conflict between Israel and Iran has been the catalyst for the recent market decline, as investors' concerns about the regional situation spiraling out of control and its impact on the global economy and risk assets have sharply intensified.
• Trump's Strong Stance: President Trump publicly warned Iran's supreme leader this week, stating that "patience is running out," and shortened the G7 summit itinerary, convening a National Security Council meeting, suggesting that the U.S. may intervene, raising market concerns about an escalation of war.
• High probability of military strike: According to prediction platform Polymarket, the market believes that the probability of the United States conducting a military strike on Iran before July remains as high as 61% (though it has slightly decreased from 70% earlier this week). This atmosphere of "tension" has heavily impacted global risk assets, and crypto is no exception, becoming one of the affected "fish in the pool."
• Risk of Oil Chokepoint: Iran controls the global oil transport lifeline, the Strait of Hormuz (which accounts for about 30% of seaborne oil and 20% of liquefied natural gas), and its involvement in conflicts poses a significant threat to global energy supply and inflation outlook, further suppressing the performance of risk assets such as Bitcoin.

Market Data: ETF Huge Dip vs. Options Market "Buying Insurance"

Amidst the panic, a striking phenomenon is the powerful capital attraction exhibited by the Bitcoin ETF:

• Billion-Dollar Buy the Dip: According to Coinglass data, this week there was a net inflow of nearly 10,000 BTC into Bitcoin ETF, worth about 1 billion USD! This pushed the total holdings to an astonishing 131 billion USD. This indicates that large institutional investors see long-term value in the dip and are actively positioning themselves.

However, in stark contrast to the "greed" of ETFs, options traders are busy "buying insurance":

Surge in Put Options Demand: Deribit exchange data shows a significant increase in demand for Bitcoin Put Options around the key $100,000 level. This reflects market participants' concerns about further price declines in the short term. Hedging Short-Term Risk: Vincent Liu, Chief Investment Officer at Kronos Research, noted that this is not a strategy for traders to expect a long-term Bitcoin crash, but rather a risk hedging strategy for short-term volatility. "As a hedging tool, put options are a short-term risk management tool, especially for spot holders. Uncertainty is intensifying as news such as the war in the Middle East continues to oscillate between 'fear' and 'greed'. Liu explained.

• XRP market is also cautious: Not only Bitcoin and Ethereum, but traders of mainstream coins like XRP are also actively adopting hedging strategies to guard against downside price risks.

Macroeconomic Clouds Gather: The Federal Reserve "Pours Cold Water", Inflation Becomes a Stubborn Illness

In addition to geopolitics, macro pressures from the traditional financial sector have also cast a shadow over the crypto recovery:

Fed hawkishness: Fed Chair Jerome Powell made it clear this week that the rate cuts that the market is looking forward to "won't come anytime soon." This undoubtedly poured cold water on investors who are expecting loose monetary policy to boost risk assets.

• High Inflation Difficult to Reduce: U.S. inflation data remains stubborn and sticky. Against this backdrop, the high interest rate environment is expected to last longer, which continues to put pressure on asset classes such as Bitcoin, Ethereum, and others that are considered high-risk and high-volatility.

Conclusion: Tense equilibrium, waiting for a breakthrough

Currently, the cryptocurrency market is in a fragile equilibrium:

• Significant Downward Pressure: Geopolitical risks in the Middle East are still escalating, with extremely high uncertainty; The Federal Reserve's firm stance on maintaining high interest rates to combat stubborn inflation creates an unfavorable macro environment.
• Long-term capital support: Bitcoin ETF continues to see large-scale net capital inflows, indicating institutional investors' recognition of Bitcoin's long-term value, providing important support below.

Vincent Liu concluded: "The crypto market will be dominated by the ever-changing news of the Middle East conflict and the flow of Bitcoin ETF funds in the near term. Uncertainty at the macro level is likely to continue to trigger a new round of volatility in the crypto market in the coming week or even longer, and significantly affect investor sentiment. ”

For ordinary investors, it is a more prudent strategy to remain vigilant, control risks, and avoid blindly chasing peaks or panic selling before the situation becomes clear. The market is holding its breath to see whether a geopolitical "black swan" or the "big hand" of institutional funds will be the first to break this suffocating sideways stagnation.

(Source: DL News)