Summary
- It said Bitcoin’s upward momentum has slowed and risk appetite has weakened amid Middle East tensions and Chair Jerome Powell’s hawkish remarks.
- It said spot Bitcoin ETFs maintained institutional demand with net inflows of $763.4 million, but that the increase in open interest (OI) in the futures market appears to be driven more by short positioning.
- It said Bitcoin fell below $70,000, pushing sentiment back into the fear zone, and assessed that a volatile market is likely to persist for some time.
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Middle East tensions and Powell’s hawkish remarks overlap
With geopolitical tensions in the Middle East escalating and hawkish remarks from Jerome Powell, Chair of the U.S. central bank (Fed), weighing on sentiment, Bitcoin’s rally is losing steam. The market is increasingly assessing that even after a short-term rebound, risk appetite is contracting again.
According to crypto exchange Upbit on the 22nd, Bitcoin recently reclaimed 110 million won before turning lower again. Overseas, it is trading around $70,000. Powell’s comment—after holding the policy rate unchanged for two consecutive meetings—that “the next move could be a rate hike” cooled market sentiment.
Market expectations are fading quickly. CME FedWatch showed the probability of no rate cuts through September rising to about 70%. The possibility has also been raised that the current hold stance could extend through the first half of next year. The probability of a 0.25%-point rate hike by June stood at about 6%.
Flows sent mixed signals. Spot Bitcoin exchange-traded funds (ETFs) recorded net inflows of $763.4 million last week (about 1.1447 trillion won), sustaining institutional demand. In derivatives markets, however, a more cautious tone is being detected.
Bitfinex, a global crypto exchange, said that “the recent increase in open interest (OI) in the futures market reflects more the building of short positions than new buying that bets on higher prices,” adding that “it is too early to be optimistic about further gains.”
The market is leaning toward the view that a volatile trading environment will persist for the time being. Sentiment is also seen as retreating into the fear zone, with Bitcoin at one point falling below $70,000, widely regarded as a psychological support level. Katie Stockton, founder of Fairlead Strategies, said “Bitcoin is staying in a neutral range,” adding that “it is hard to say that the risk-on phase has resumed.”
Kang Min-seung, BloombergBit reporter minriver@bloomingbit.io
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
