Crypto Weekly Report (6.15-6.22): Geopolitical Risks Escalate Impacting Crypto Market Trends

This week, the crypto market experienced complex environmental changes. Institutional funds continued to flow in, the sentiment of caution in the derivatives market increased, and geopolitical risks suddenly escalated; these three factors intertwined to influence the market trends.

Bitcoin fluctuates between $102,000 and $109,000. Over the weekend, the situation in the Middle East escalated, leading to a brief panic sell-off, followed by some recovery. The internal structure of the crypto market remains stable, which is an important factor supporting the price. However, the intensification of geopolitical conflicts has caused short-term traders to price Bitcoin down.

The future trend of Bitcoin will largely depend on the developments in the Middle East situation. If the conflict gradually eases, Bitcoin is likely 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 trend.

From June 16 to 18, Israel continued targeted airstrikes on specific objectives, which were subsequently met with retaliatory strikes. The market immediately entered defensive mode: Brent crude oil rose nearly 7% for the week, briefly surpassing the $78 mark; gold prices also increased, reaching a peak of $33,452.37 per ounce.

On June 19, the situation further escalated. Brent crude oil futures rose again by 2.8%, reaching $78.85, a five-month high; the VIX volatility index increased, while U.S. Treasury yields experienced a risk-off decline.

On June 20, the market showed brief signs of easing, oil prices slightly retreated, and global stock indices experienced a technical rebound.

However, in the early hours of June 21, the situation worsened again. Specific nuclear facilities were subjected to precise strikes. This move immediately triggered severe diplomatic turbulence. United Nations Secretary-General Guterres described the situation as "extremely precarious," while the European Union and the United Kingdom called on all parties to exercise restraint.

As the event occurred during the weekend market closure, the pricing response in mainstream financial markets will be revealed on Monday. However, derivatives and offshore trading have already provided forward signals: energy and military industry ETFs are bidding up during the night session; CME crude oil options OI has significantly increased in the $90 strike price range; while high-risk encryption assets have shown selling pressure first, with Bitcoin dropping about 1.14% and Ethereum's intraday decline exceeding 2.96%.

This week's developments have pushed the situation into a gray area between "controllable confrontation" and "further escalation". The market has entered a typical "oil inflation - US Treasury safe-haven - tech pullback - precious metals favored" pattern. If the conflict is controlled in the coming weeks, the market may digest the situation amidst high volatility; however, if the conflict further escalates, the magnitude and pace of global asset repricing will significantly intensify.

Historical data shows that Bitcoin often retreats initially at the onset of geopolitical crises, followed by a weak negative correlation recovery with gold; however, if the conflict evolves into a dual squeeze on global liquidity and funding costs, the sensitivity of Bitcoin and Ethereum will be significantly amplified.

crypto market

At the beginning of this week, the market experienced a slight recovery driven by expectations of a "controllable" situation: Bitcoin rebounded to a high of $109,000, with net inflows into Bitcoin spot ETFs for eight consecutive trading days. This funding data provides key support for prices amid macro noise. Against the backdrop of cooling on-site funds, institutional buying power has become the main force keeping Bitcoin prices above $100,000.

The FOMC results announced on June 19, "hold steady + dot plot slowdown," did not disrupt the oscillation rhythm of Bitcoin, but the futures market shows that the hedging scale is increasing.

Data released after the market on Friday showed that ETH ETFs experienced the largest single-day net outflow since June ($11.3 million), leading to a chain reaction of deleveraging as institutions reduced their positions. The ETH/USD price once sharply dropped to $2,372, with increased trading volume, causing high-beta assets like SOL and DOGE to also retract.

On June 20th during the US trading session, a round of high leverage squeezing in the market caused Bitcoin to quickly drop below 103,000 USD, with over 90% being long positions; ETH and SOL fell by as much as 6-9%. This "flash kill" event confirmed the fragility of excessive leverage on the derivatives side, marking the first large-scale systemic liquidation in the market since the rapid rise in May.

The weekend risk peak occurred in the early hours of June 21-22, Eastern Time: geopolitical risks suddenly escalated. The crypto market, as the only major asset class trading in real-time 24/7 globally, saw Bitcoin briefly fall below $100,000, but it closed down by 1.14%, showing relatively strong performance. However, ETH, after a nearly 10% drop over two consecutive days, fell again by 2.96%, indicating that the liquidity of high-risk assets is very fragile.

From a technical indicator perspective, the geopolitical conflict has caused Bitcoin to temporarily break below the first upward trend line, but it still operates within the range of $90,000 to $110,000. The structural tension in the market remains intact, and the changes in funding support are minimal. This week's downward pricing of Bitcoin is primarily due to panic sentiment triggered by the escalation of geopolitical conflicts. If the conflicts do not escalate further, this impact will gradually dissipate; however, if the conflicts continue to worsen, it will test the key support levels of $100,000 and $90,000.

Fund In and Out

After the significant rebound in April and May, the capital inflow has shown a divergence. The funds in the stablecoin channel have started to weaken, while the capital in the BTC Spot ETF channel remains relatively robust and stable.

This week, the inflow of funds into the BTC Spot ETF channel was $1.022 billion, significantly lower than last week's $1.384 billion, but still maintained at a high level. However, this data may face significant challenges next week, as geopolitical conflicts could continue to affect the U.S. stock market, making it difficult for the BTC Spot ETF channel funds to maintain an independent trend.

Last week, the stablecoin channel saw an inflow of 1.273 billion, while this week it turned into an outflow of 132 million. This rapid cooling is consistent with the trends we have observed in the contract market and the lending market.

This week, ETH Spot ETF inflows amounted to $40.77 million, with inflow scale shrinking in the first half of the week, and by Friday it turned into an outflow of over $100 million. The decrease in ETH capital inflow scale may put pressure on high β assets. A flash crash could cause significant damage to the market.

Selling Pressure and Sell-off

Against the backdrop of delayed interest rate cuts and rising geopolitical risks, the price of Bitcoin remains high between $100,000 and $120,000, with decisive forces coming from institutional allocation and structural tensions in the market.

This week, long-term holders increased their positions by 28,920 coins, while short-term holders continued to decrease their positions by 24,650 coins, and the inventory on centralized exchanges continued to decline. Due to panic selling and weakened speculative enthusiasm, the outflow from exchanges significantly decreased to 1,555.9 coins this week.

These data may indicate that the confidence of long-term holders in Bitcoin is continuing to strengthen, while the enthusiasm of short-term traders is cooling off more quickly. The short-term pricing power of Bitcoin is jointly determined by on-site short-term traders and the funds from the BTC Spot ETF channel. Currently, both are showing signs of cooling. If geopolitical conflicts are resolved quickly, Bitcoin may turn from danger to safety and return to the 105,000 level. If the situation worsens, it is highly likely to fall below the 100,000 level, and even test the 90,000 dollars (though this is less probable).

Industry experts believe that the logic behind Bitcoin's medium to long-term price trends has not changed, unless geopolitical conflicts evolve into larger-scale regional conflicts.

Cycle Indicator

According to relevant data, the BTC cycle indicator is 0.625, in an uptrend.