Bitcoin hovered around $105,200 on Thursday, reflecting a cautious crypto market rattled by escalating tensions between Israel and Iran and a steadfast U.S. Federal Reserve policy. The digital asset’s subdued performance follows renewed Middle East conflict, now in its seventh day, which has unsettled global markets, including cryptocurrencies.
Middle East Conflict Impacts Crypto
Bitfinex analysts noted weak buying pressure on Bitcoin, warning that a failure to hold the $102,000–$104,000 support range could trigger further declines. However, they suggested that maintaining this level might pave the way for a rally to $112,000 or a new high within two months, drawing parallels to past capitulation phases that marked market bottoms. The Israel-Iran conflict has introduced volatility, with investors closely monitoring developments alongside U.S. President Donald Trump’s proposed tariffs, which could fuel inflation and affect crypto prices.
U.S. Fed’s Hawkish Stance
The U.S. Federal Reserve’s decision to maintain interest rates at 4.25%–4.5% for the fourth consecutive meeting, announced on June 18, has added pressure on Bitcoin. Fed Chair Jerome Powell, labeled “too late Powell” by Trump, dismissed immediate rate cuts, citing a resilient U.S. economy that has defied slowdown forecasts. Powell projected rising summer inflation, potentially impacting consumer prices. Despite political pressure from Trump, who criticized Powell’s stance, the Fed anticipates a half-percentage-point rate cut later in 2025.
Robust Bitcoin Inflows
Despite market uncertainty, U.S. spot Bitcoin exchange-traded funds (ETFs) recorded $388 million in inflows on Wednesday, marking eight consecutive days of positive flows. Fidelity’s Wise Origin Bitcoin Fund and BlackRock’s iShares Bitcoin Trust led with $104.4 million and $278.9 million, respectively, per Farside Investors data. This institutional confidence underscores Bitcoin’s appeal as a scarce asset, with 566 BTC entering long-term “ancient supply” daily, outpacing the 450 BTC issuance rate, according to Fidelity Digital Assets.
Ancient Supply Dynamics
Fidelity’s June 18 report highlighted that ancient supply, now 34.4 million BTC (17% of total supply), including a third attributed to Satoshi Nakamoto’s likely lost coins, grows post-2024 halving. However, since the 2024 U.S. election, five-year holder supply has declined 39% of the time, triple the average rate, suggesting long-term holders are taking profits amid uncertainty. This movement may explain Bitcoin’s sideways and downward price action in Q1 2025, though ancient supply growth typically signals scarcity but not always immediate price gains.
Market Outlook
Bitcoin’s trajectory remains tied to geopolitical and monetary developments. The Israel-Iran conflict and U.S. Fed’s hawkish policy pose short-term headwinds, but robust ETF inflows and Bitcoin’s scarcity narrative support long-term optimism. Investors are advised to watch the $102,000–$104,000 support zone for signs of recovery or further correction.
