Geopolitical risk shocks impact risk assets, Bitcoin retreats from six-week highs, falling below $72,000

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Source: Zhitong Finance Network

Amid the escalation of Middle East conflicts triggering a global market risk-off sentiment, Bitcoin retreated after reaching a high point. On Wednesday, Bitcoin, the world’s largest cryptocurrency, fell over 3.6%, with a low of $71,560. Earlier this week, Bitcoin rose close to $76,000, hitting its highest level since early February.

Meanwhile, other more volatile cryptocurrencies also generally weakened, with Ethereum and Solana both dropping about 5%, indicating that the overall crypto market is under pressure amid declining risk appetite.

Concept stocks in the crypto sector also declined. As of the time of writing, Circle (CRCL.US) fell over 1.8%, MicroStrategy (MSTR.US) dropped over 5%, Coinbase (COIN.US) declined over 4%, and Robinhood (HOOD.US) fell more than 2.7%.

Market analysts point out that this correction is closely related to geopolitical risks. Hanson Birringer, Managing Director of Flowdesk, said that after news of Israel attacking Iran’s South Pars oil and gas facilities, the market quickly shifted to a risk-averse mode. Coupled with weakness in the U.S. tech sector, this jointly dragged down the performance of crypto assets.

From a market structure perspective, Bitcoin has recently repeatedly faced resistance above $70,000, indicating insufficient upward momentum. Blockchain data firm Glassnode noted that short-term holders have been continuously taking profits in this price range, weakening the momentum for further breakthroughs. This pattern has occurred multiple times over the past few weeks.

Despite this, Bitcoin’s current price is still about 40% below its peak of approximately $126,000 in early October this year, reflecting a cooling of overall demand in the crypto market influenced by changes in Federal Reserve policies, geopolitical uncertainties, and fluctuations in institutional demand.

However, from a capital flow perspective, there are signs of stabilization. Glassnode stated that overall signals in the spot market are “divided but somewhat positive,” with on-chain activity remaining relatively steady. The overall market environment is gradually showing signs of stability and slow recovery.

Additionally, fund inflows into exchange-traded funds (ETFs) also indicate a rebound in institutional confidence. Data shows that in the past week, net inflows into U.S.-listed spot Bitcoin ETFs exceeded $750 million, marking the third consecutive week of net capital inflows, suggesting that institutional investors are re-entering this asset class.

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Editor: Zhu Hennan