Encryption Asset Market Weekly Report: Geopolitical Risks Surge, BTC Faces Downward Pressure

This week, the cryptocurrency market has experienced the intertwining effects of multiple factors. BTC fluctuated within the range of 102000-109000 USD, experiencing a brief dip over the weekend due to geopolitical conflicts, followed by some recovery.

The internal structural forces of the market remain stable, providing important support for prices. However, the escalation of geopolitical risks has led short-term traders to price BTC downwards. Under the current situation, the future trend of BTC will heavily depend on the development of the Middle East conflict. If the situation gradually eases, BTC 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. Israel has carried out precise strikes on targets within Iran, and Iran subsequently retaliated with missiles and drones, leading to a continuous increase in the intensity of regional conflicts. The market then entered a defensive state, with significant increases in the prices of crude oil and gold.

The shift in the U.S. government's attitude marks a further deterioration of the situation. The White House publicly stated for the first time that it is evaluating military options, after which the U.S. military launched an attack on Iranian nuclear facilities, triggering severe diplomatic shockwaves. The United Nations has called on all parties to exercise restraint, but Iran has threatened to take retaliatory actions, even considering blocking the Strait of Hormuz.

This series of developments has pushed the market into a typical risk-averse mode: rising crude oil prices, declining U.S. Treasury yields, a pullback in tech stocks, and a surge in demand for precious metals. If the conflict further escalates to key shipping routes or U.S. military bases, the magnitude and pace of global asset repricing could significantly intensify.

encryption market

The cryptocurrency assets experienced multiple influences this week, including support from institutional funds, rising derivative risks, and a sudden escalation in geopolitical risks. BTC continues to fluctuate in the range of $102,000 to $109,000, with a brief panic sell-off over the weekend due to geopolitical tensions, followed by some recovery.

At the beginning of the week, the market's expectation of "controllable" conflicts in the Middle East brought a slight rebound, with BTC reaching a high of 109,000 USD. Institutional funds continue to flow into the spot ETFs, providing key support for the price. However, as the geopolitical situation worsens, market sentiment has turned cautious.

After the market closed on Friday, there was a large-scale net outflow from the ETH ETF, triggering a chain reaction. The price of ETH plummeted, dragging down other high-risk assets in tandem. Over the weekend, news of U.S. military airstrikes on Iranian nuclear facilities further exacerbated market volatility, with BTC briefly dropping below $100,000, but the decline was relatively limited, indicating strong resilience.

From a technical indicator perspective, the geopolitical conflict has caused BTC to temporarily break below the first upward trend line, but it is still operating within the $90,000-$110,000 range. The structural strength in the market remains intact, and funding support is relatively stable. This week's decline is mainly due to panic caused by geopolitical risks. If the situation worsens further, it may test the key support levels of $100,000 and $90,000.

Capital Flow

This week, BTC spot ETF inflows amounted to $1.022 billion, a decrease from last week but still maintaining a high level. However, the uncertainty of the geopolitical situation may pose challenges to inflows next week.

In terms of stablecoins, there was a net outflow of 132 million USD this week, consistent with the cooling trends in the futures and lending markets. There was an inflow of 40.77 million USD into the ETH spot ETF, but there was a single-day outflow of over 100 million USD on Friday. The decrease in the scale of capital inflows may put pressure on high-risk assets.

Position Changes

In a complex macro environment, the ability of BTC prices to remain high is primarily attributed to institutional allocation and structural forces in the market. This week, long positions increased by 28,920 coins, while short positions decreased by 24,650 coins, and reserves on centralized exchanges continued to decline. The net outflow from exchanges has significantly decreased to 1,555.9 coins, reflecting a dual cooling of panic selling and speculative enthusiasm.

These data indicate that long-term holders' confidence in BTC is increasing, while short-term traders' enthusiasm is waning. The short-term pricing of BTC is influenced by both market traders and ETF fund flows. If the situation in the Middle East quickly eases, BTC is expected to return to around $105,000; however, if the conflict escalates, it may drop below $100,000 and even test the $90,000 support (which has a lower probability).

Overall, the fundamental logic of the medium to long-term price trend of BTC has not changed, unless regional conflicts evolve into a large-scale war with direct US involvement.

Cycle Indicators

According to EMC Labs data, the EMC BTC cycle indicator is currently 0.625, in an upward phase.