The global financial market is experiencing a severe shock triggered by geopolitical tensions. This week, with the sharp escalation of the Middle East conflict—especially the news of Israel launching airstrikes against Iran, along with the ongoing stalemate of the Russia-Ukraine war, risk assets are generally under pressure. As a barometer of the cryptocurrency market, Bitcoin (BTC) has not been spared, with its price briefly falling below $103,000, continuing the previous downward trend. However, amidst the overall market gloom, it is noteworthy that the demand for BTC from publicly listed companies and institutional investors has shown remarkable resilience, injecting a glimmer of optimism into Bitcoin's long-term prospects.
- Geopolitical Storm Sweeps In, Bitcoin Under Pressure
On Thursday, Bitcoin (BTC) continued its decline from the previous day, falling below $103,000. The core driving force behind this pullback stems from the escalating geopolitical conflicts. According to the Kobeissi Letter on Thursday, U.S. officials have learned that Israel is fully prepared to launch military action against Iran. Early Friday morning, Israel announced that it had launched airstrikes against Iran, with Iranian media confirming explosions in Tehran and stating that Israel is attacking "dozens" of nuclear and military targets. The Israeli Defense Minister indicated that Iran is expected to soon launch missile and drone attacks against Israel, with tensions reaching a boiling point.
At the same time, the flames of the Russia-Ukraine war also escalated again on Thursday, with Russia intensifying its bombing of Ukraine, claiming it was retaliation for recent Ukrainian attacks, and Kharkiv faced a new round of concentrated drone strikes. These ongoing geopolitical risks have triggered strong risk-averse sentiment in the market, placing significant pressure on risk assets, including Bitcoin.
FXStreet analyst Haresh Menghani pointed out that the market's initial reaction to positive developments was short-lived, leading to cautious investor sentiment and prompting declines in higher-risk asset prices.
- Heightened Risk Aversion, Traditional Safe-Haven Assets Favored
In the context of escalating geopolitical risks, investors are increasingly shifting their funds towards traditional safe-haven assets. Gold, as a classic safe-haven tool, has shown strong upward momentum. On Thursday during the Asian trading session, gold briefly reached a high of $3,423, clearly indicating investors' intent to seek refuge.
In addition to gold, crude oil prices have also been directly affected by the tensions in the Middle East. For the first time since March, oil prices broke above $69 per barrel, and after the news of Israel's attack on Iran, crude oil prices surged by more than $3 per barrel. This reflects market concerns that oil supply in the Middle East may be disrupted. If the conflict in the Middle East escalates further, these traditional safe-haven assets and commodities directly related to geopolitical issues may continue to rise, while risk assets like Bitcoin may face greater downward pressure.
- Going Against the Trend: Strong Demand for BTC from Institutions and Public Companies
Despite the overall market being shrouded in risk-averse sentiment, it is encouraging that the demand for BTC from publicly listed companies and institutional investors remains strong, even increasing against the trend. This indicates that, in the face of short-term market volatility, long-term investors' confidence in Bitcoin as a strategic asset has not wavered.
Mercurity Fintech Holding Inc. (MFH) announced on Wednesday its plan to raise $800 million to establish a long-term Bitcoin treasury reserve, demonstrating its commitment to incorporating Bitcoin into its asset allocation. On the same day, GameStop also announced plans to raise $1.75 billion through a private placement of 0.00% convertible senior notes maturing in 2032. The company increased its holdings by 4,710 BTC between May 3 and June 10, having previously issued $1.3 billion in convertible notes in March. The interest of these companies in holding Bitcoin highlights the growing acceptance of Bitcoin as a strategic asset, which not only enhances its legitimacy but may also drive its long-term adoption in broader fields.
The inflow of institutional funds also provides support for the market. According to SoSoValue data, the U.S. spot Bitcoin exchange-traded fund (ETF) recorded an inflow of $164.57 million on Wednesday, marking the third consecutive day of inflows this week. This indicates that despite short-term price fluctuations, institutional investors are still continuously allocating Bitcoin through compliant channels.
- Future Outlook: The Game Between Geopolitics and Bitcoin
Currently, geopolitical risks are undoubtedly a key factor influencing the trends in the cryptocurrency market. U.S. and Iranian officials were scheduled to hold the sixth round of talks in Oman on Sunday regarding Iran's escalating uranium enrichment program, but negotiations seem to have stalled, complicating the situation further. Although U.S. President Trump expressed hope for a peaceful resolution, he also acknowledged that an Israeli strike against Iran "is very likely to happen." The U.S. military is also preparing for various contingencies that may arise in the Middle East, including the evacuation of American civilians.
However, amidst such uncertainty, some analysts see long-term potential in Bitcoin. Naeem Aslam, an analyst at Zaye Capital Markets, noted in a report that as investors seek to shield themselves from losses caused by geopolitical uncertainty, Bitcoin will benefit from this. This suggests that while Bitcoin may decline in the short term due to risk-averse sentiment, its decentralized and censorship-resistant characteristics may make it an alternative "digital safe-haven asset" in the long run, especially when the traditional financial system faces shocks.
Conclusion:
The current decline in Bitcoin's price is a direct reflection of the concentrated outbreak of global geopolitical risks in the financial market. Israel's airstrikes on Iran, the escalation of the Middle East conflict, and the ongoing Russia-Ukraine war have collectively created a strong risk-averse atmosphere, prompting funds to flow into traditional safe-haven assets. However, amidst this turbulence, the sustained demand for BTC from publicly listed companies and institutional investors, along with the inflow of funds into spot Bitcoin ETFs, provides solid support for Bitcoin's long-term value. This indicates that despite the severe fluctuations in short-term market sentiment, Bitcoin's position as a strategic, long-term asset is increasingly solidified. In the future, whether Bitcoin can ultimately demonstrate its "digital gold" safe-haven properties amidst the complex geopolitical game will be a focal point of market attention.
Related: Cryptocurrency Eliminates the Weekend: Hedge Funds Quietly Compete to Adapt
Original: “Middle East Conflict Erupts Again! Israel Strikes Iran, Bitcoin (BTC) Falls Below $103,000”
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