Bitcoin ETFs Plummet as Geopolitical Tensions Soar!

Inflows Crash Amid Rising Uncertainty

Hang onto your hats, crypto fans! Spot Bitcoin ETFs in the US are tanking as investors get spooked by the escalating geopolitical chaos. We're talking a brutal drop in inflows that's hitting these funds hard!

Get this: data from SoSoValue reveals that over the last week, the 12 spot Bitcoin ETFs only managed to pull in $1.02 billion. That's a staggering 26% plunge from the $1.39 billion they raked in the week before. Ouch!

The week started off with a bang, with $412.2 million flowing in on Monday, followed by $216.48 million on Tuesday and $389.57 million on Wednesday. But then, bam! Markets were closed on Thursday for Juneteenth, and when they reopened on Friday, inflows crashed to a measly $6.37 million. That's a jaw-dropping 98% drop from the previous three days' average!

Friday's action was all about two big players: BlackRock's IBIT saw $46.91 million in inflows, but that was nearly wiped out by a massive $440.55 million outflow from Fidelity's FBTC. The rest of the ETFs? Nada, zilch, zero activity!

This nosedive in investor demand kicked off as President Donald Trump set a two-week deadline to decide whether the US would jump into Israel's military campaign against Iran. That uncertainty sent shockwaves through the markets, driving a broader sell-off in risk-on assets like crypto.

Last week's ETF flows showed early signs of caution, but over the weekend, things got even more intense. Geopolitical tensions are ratcheting up, and they could keep weighing on demand this week.

Airstrikes and Retaliation Amp Up the Pressure

Hold your breath, because on June 22, American forces launched a coordinated airstrike on Iran, hitting three key nuclear sites. Talk about a turning point in the crisis! This move has everyone on edge, fearing a full-blown conflict.

Iran isn't taking this lying down. They've vowed retaliation, warning of "everlasting" consequences and even threatening to shut down the Strait of Hormuz. That's a major chokepoint for nearly 20% of the world's oil supply!

Oil traders are on red alert, with some analysts now predicting prices could skyrocket to $120–$130 per barrel. That could push US inflation back to 5%, a level we haven't seen since March 2023 when the Fed was still hiking rates like crazy.

Oil prices are often a telltale sign of global economic stability, and they can sway central bank policies. That, in turn, can impact investor demand for risk-on assets like Bitcoin.

As the news sank in, investors started bailing out of crypto and piling into traditional safe-haven assets like gold and defense-sector stocks.

Bitcoin took a hit, dropping over 2.8% to dip below $99,000 on June 22. Ethereum (ETH) got hammered even harder, tumbling around 9%. Other major altcoins, including Virtuals Protocol, Celestia, Aptos, and AB, were all down over 9% as well.

But wait, there's a twist! Despite the sell-off, Bitcoin (BTC) managed to bounce back above $100,000 by press time. That recovery was fueled by a massive 75.8% spike in daily trading volume, which soared to $48.4 billion.

Derivatives action also exploded, with volume jumping 67% to $136 billion, according to Coinglass data. It looks like some traders may have closed positions due to the uncertainty but are now dipping their toes back in the water.

So, what's next for Bitcoin? Buckle up, because its trajectory will likely be shaped by how fast we can resolve these diplomatic tensions and how resilient ETF inflows can be against ongoing sell-side pressure. These are the factors that have historically steered Bitcoin's performance during geopolitical firestorms.