Crypto Market Weekly Report: Geopolitical Risks Rise, BTC Price Under Pressure to Dip

This week, the crypto market experienced multiple influences including institutional capital support, rising derivative risks, and worsening geopolitical situations. BTC fluctuated in the range of $102,000 to $109,000, briefly dipping over the weekend due to the situation in the Middle East before partially recovering.

The internal structural forces of the market are basically stable, providing important support for prices. However, due to the intensification of geopolitical conflicts, short-term traders have made downward adjustments to BTC. With the current internal structure remaining stable, the subsequent trend of BTC will mainly depend on the developments in the Middle East situation. If the conflict gradually eases, BTC is expected to return to around 105000 dollars.

Policies and Macro Environment

The situation in the Middle East has continued to escalate this week. Israel has carried out precise airstrikes against targets within Iran, and Iran subsequently retaliated with missiles and drones, with both sides' firepower clashes continuously escalating. The market then shifted into defense mode, with significant increases in oil and gold prices.

The U.S. government has stated that it is evaluating military options, marking a shift from behind-the-scenes coordination to open intervention. Subsequently, the U.S. military launched an attack on Iranian nuclear facilities, triggering a severe diplomatic upheaval. The United Nations has called for restraint from all parties, while Iran has threatened to take retaliatory actions.

This series of developments has pushed the situation in the Middle East in a more uncertain direction. The market has entered a typical risk-averse mode, with crude oil prices rising, bond yields declining, tech stocks correcting, and precious metals being sought after. If the conflict escalates further, the magnitude and speed of global asset repricing may significantly intensify.

Historical data shows that BTC often experiences an initial dip during the early stages of geopolitical crises, followed by a weakly negative correlation recovery with gold. However, if the conflict evolves into a dual pressure of global liquidity and funding costs, the sensitivity of Bitcoin and Ethereum will significantly increase.

crypto market performance

BTC continued to fluctuate between $102,000 and $109,000 this week, briefly dipping over the weekend due to the situation in the Middle East, followed by some recovery. It fell 4.36% over the week, a decrease of $4,602.38.

At the beginning of the week, the market's expectation of a "controllable" situation in the Middle East led to a slight rebound, with BTC reaching a high of $109,000. Institutional funds continue to flow into spot ETFs, providing crucial support for the price.

The Federal Reserve's decision to keep interest rates unchanged has not had a significant impact on BTC's performance, but the hedging scale in the futures market has increased. On Friday, there was a large net outflow from the ETH ETF, triggering a chain deleveraging effect, causing ETH to drop to 2372 USD at one point, which led to a decline in other high-risk assets.

The news of the US military's raid on Iran's nuclear facilities over the weekend disrupted the market balance. As the only major asset traded in real-time 24/7 globally, the crypto market reacted first, with BTC briefly dipping below $100,000, but the decline was relatively limited, closing down 1.14%. ETH performed weaker, with a drop of nearly 3%.

From a technical perspective, BTC has temporarily dipped below the first ascending trend line but is still operating within the $90,000-$110,000 range. The internal structural forces of the market remain largely intact, with little change in funding support. This week's decline is primarily due to panic emotions triggered by geopolitical conflicts. If the situation eases, this impact will gradually dissipate; however, if the conflict continues to escalate, it may test the key support levels of $100,000 and $90,000.

Capital Flow

After a significant rebound in the early stage, the capital inflow has shown differentiation. The inflow of funds through stablecoin channels has weakened, while the capital inflow through BTC spot ETF channels remains relatively stable.

This week, the net inflow of BTC spot ETF is 1.022 billion USD, a decrease from last week's 1.384 billion, but it still maintains a high level. Due to geopolitical issues, this data may face challenges next week.

The stablecoin channel had a net outflow of $132 million this week, compared to a net inflow of $1.273 billion last week. The ETH spot ETF saw a net inflow of $40.77 million this week, but a single-day net outflow exceeding $100 million on Friday. The reduction in ETH inflows may put pressure on high-risk assets.

Market Structure

Against the backdrop of delayed interest rate cut expectations and rising geopolitical risks, the BTC price remains at a high level of $100,000 to $120,000, mainly benefiting from institutional allocation and structural forces in the market.

This week, long positions increased by 28,920, while short positions decreased by 24,650, and the inventory at centralized exchanges continued to decline. The net outflow from exchanges significantly decreased to 1,555.9, reflecting a cooling of panic selling and speculative enthusiasm.

These data indicate that long-term holders' confidence in BTC continues to strengthen, but the enthusiasm of short-term traders is rapidly cooling. The short-term pricing power of BTC is mainly determined by on-site short-term traders and spot ETF funds, both of which are currently showing signs of cooling.

If the situation in the Middle East eases quickly, BTC is expected to return to around 105,000 USD. However, if the conflict worsens, it may dip below 100,000 USD, and even test the 90,000 USD support (which is less likely). Unless the situation evolves into a regional war with direct U.S. intervention, the mid to long-term trend logic for BTC has not changed.

Cycle Indicator

The EMC BTC cycle indicator is at 0.625, in an upward phase.