Bitcoin re-enters the 'fear zone'

Crypto Now

Middle East tensions, Powell’s hawkish remarks overlap

As geopolitical tensions in the Middle East escalate, hawkish remarks from Jerome Powell, chair of the US central bank (Fed), have compounded the pressure, sapping Bitcoin’s upward momentum. The market is increasingly seeing risk appetite contract again despite a short-term rebound.

According to crypto exchange Upbit on the 22nd, Bitcoin recently reclaimed 110 million won before turning back down. Overseas, it is trading around $70,000. Powell’s comment—after holding the policy rate steady for a second consecutive meeting—that “the next move could also be a rate hike” poured cold water on sentiment.

Market expectations are cooling quickly. According to CME FedWatch on the day, the probability of no rate cuts by September rose to about 70%. The possibility was also raised that the rate-hold stance could extend into the first half of next year. The probability of a 0.25%-point rate hike by June was 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 emerging.

Global crypto exchange Bitfinex said that “the recent increase in open interest (OI) in the futures market has more of the character of building short positions than fresh buying betting on a price rise,” adding that “it is too early to be optimistic about further gains.”

The market is leaning toward the view that a volatility-driven regime may persist for the time being. Sentiment is also seen as having retreated into the fear zone, with Bitcoin at one point falling below $70,000, considered a key psychological support level. Katie Stockton, founder of Fairlead Strategies, said, “Bitcoin is stuck in a neutral trend,” adding, “it’s hard to say that the risk-on phase has resumed.”

Kang Min-seung, BloombergBit reporter minriver@bloomingbit.io