Bitcoin trades sideways above $70K after correcting from the $74K level recorded earlier this week.
Bitcoin defied inflation risks and higher-for-longer interest rates amid the raging war in the Middle East, while many major stock markets around the world fell.
What happened
The recent conflict in the Middle East disrupted energy supplies by closing the Strait of Hormuz and targeting key infrastructure in the region, which caused a significant spike in crude oil and natural gas prices.
Hopes for an interest rate cut by the Federal Reserve have diminished further. According to the CME FedWatch Tool data, the likelihood of maintaining the current rates in June increased from 42.7% a week ago to 64.4%. As a result, the expectation for a rate cut has shifted to July, where the chances are nearly 50-50.
Bitcoin rose from a low of $63K on Saturday, the day the war ignited, to $74K on Wednesday, marking a 17% increase, before correcting to $70K now.
We should question whether this recent rally is driven by real demand or just another speculative move that could fade away soon, causing another severe crash.
By the numbers
Bitcoin spot exchange-traded funds have attracted $917.28M in netflow so far this week, per SoSo Value. Those flows consist of 3 sessions on inflow and one of $227.83M of outflow. Since October 10th, spot ETFs have exhibited a pattern of significant outflows followed by a brief inflow lasting 3-5 days, which then sharply reverses.
These dynamics highlight short-lived speculative activity, indicating that ETF inflows may be an inconsistent lead indicator for market recoveries when they run counter to current price trends.
Unless the market experiences sustained, multi-billion-dollar inflows over several weeks, the current intermittent pattern is likely to persist, exerting downward pressure on overall price action.
The speculative narrative is further reinforced by current trends in crypto futures, where open interest and ETF inflows appear increasingly correlated. According to figures from CoinGlass, Bitcoin open interest rose from roughly $43 billion at the start of the week to nearly $49.6 billion by Wednesday, currently hovering near $46.8 billion.
On the other hand, according to BGeometrics, the number of whale addresses holding 1K-10K BTC rose by only 12 from a week ago to 1924, just above last year’s low at 1903. Whale accumulation seems very slow yet fragile, suggesting a weak buying sentiment even at very low prices.
Conversely, on-chain metrics show a notable surge in miner netflow, which surpassed 2,670 BTC today, according to CryptoQuant. This mark represents the largest spike since August 2024, suggesting that if miners view current valuations as a floor and choose to hold their assets, it may provide a new defensive barrier for the market.
In the absence of clear signals regarding organic demand, whale accumulation, and miner retention, the recent Bitcoin rally remains vulnerable and could reverse sharply toward the lower $60,000 range or below. However, the current upward trend could find further momentum if there is an unexpected de-escalation in geopolitical tensions. Such a shift could trigger a new bullish wave targeting the $80,000 level, at which point the sustainability of the move would again be evaluated using the aforementioned metrics
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