The crypto market declined on Thursday as traders priced in rising geopolitical tensions in the Middle East and persistent outflows from crypto exchange-traded funds. Bitcoin slumped to $66,400, while the total crypto market cap fell 2.35% over the past 24 hours to about $2.29 trillion, according to data compiled by SoSoValue and market trackers.
Key takeaways
- Price move: Bitcoin at $66,400 with the broader crypto market down about 2.35% in 24 hours; several major tokens posted sharper declines.
- Catalyst: Geopolitical tensions in the Middle East, ongoing ETF outflows, and a boost in oil prices as markets gauge the trajectory of the conflict; equities in Europe and Asia also weakened.
- Implication: Weak demand in both spot and futures markets signals ongoing headwinds for crypto liquidity and sentiment amid elevated macro risk and rate expectations.
What drove the move
The latest slide in crypto prices came as traders reassessed the risk environment amid heightened geopolitical strain in the Middle East. Oil prices also moved higher on the back of the geopolitical backdrop, with Brent crude surpassing $108 a barrel and West Texas Intermediate around $107, intensifying inflation concerns and contributing to caution in risk assets.
Meanwhile, sentiment indicators echoed the cautious tone. The CNN Money Fear and Greed Index flashed a low reading, underscoring a risk-off mood among investors, while the Crypto Fear and Greed Index remained in the fear zone as traders anticipated that inflation would stay elevated and keep the Fed on a higher-for-longer path.
On the ETF side, there was clear evidence of waning demand for crypto exposure. SoSoValue data show spot Bitcoin ETFs shed more than $173 million on Wednesday, and inflows evaporated in the prior week, with outflows exceeding $296 million the week before. That leaves cumulative net inflows for Bitcoin ETFs well south of peak levels, though still substantial historically.
Ethereum-focused products also faced redemptions, with Ethereum ETF outflows rising to $7.10 million on Wednesday after a larger outflow of $46 million in the previous month. Across the broader ETF spectrum, assets tied to other major cryptos, including XRP, Solana, Polkadot, Litecoin and Dogecoin, have not demonstrated meaningful inflows in recent months. XRP spot ETFs posted a $1.2 million outflow on Thursday after $31 million of withdrawals in the last 30 days.
Market reaction
Equity markets abroad reflected the risk-off shift in crypto trading. The Euro Stoxx 50 declined about 1.92%, while the German DAX slipped roughly 1.80%. In Asia, the Hang Seng Index fell about 0.8%, and Japan’s Nikkei 225 and South Korea’s Kospi were down more than 1% as investor risk appetite cooled.
In the Americas, futures tied to the Dow Jones and Nasdaq 100 remained in the red, signaling tempered sentiment despite any intra-session volatility in crypto. The oil complex’s strength also fed into this risk-off backdrop, with persistent pressure on expectations for near-term inflation and monetary policy paths.
What analysts are saying
Market participants continue to point to a combination of macro pressure and structural weakness in crypto demand as the primary drivers of the current leg lower. Data show continued outflows from both spot-ETF products and crypto futures exposure, suggesting that investors are rotating away from risk assets and reassessing their crypto allocations amid elevated inflation expectations and uncertain policy signals.
Analysts note that the decline in futures open interest highlights a softer risk tolerance in the derivatives market. Bitcoin futures open interest has tumbled to about $46 billion from last year’s high near $95 billion, while Ethereum futures open interest sits around $28.3 billion versus a peak above $60 billion. Overall crypto futures open interest has eased to about $103.7 billion from higher levels observed previously.
Market breadth remains narrow, with overall crypto demand appearing to trend lower than in the prior cycle. Total market demand has fallen from a peak around $352 billion to about $176 billion, signaling a broad retreat in investor appetite for crypto exposure at current levels.
Bigger picture
The current environment ties crypto pricing to broader macro themes: elevated inflation pressures, expectations for a slower path to rate cuts or higher-for-longer policy, and geopolitical risk that can swiftly shift risk appetite. The combination of waning ETF inflows, shrinking futures open interest, and weakening spot volumes suggests a structural testing period for crypto liquidity and participation.
Investors are watching the interplay between macro data, central-bank guidance, and geopolitical developments. The trajectory of oil prices, currency movements, and global equities will likely influence the near-term path for both cryptocurrencies and related financial instruments.
Closing outlook
Looking ahead, traders will be focused on fresh data on inflation and interest-rate expectations, as well as any new developments related to the geopolitical situation in the Middle East. Earnings, if any, and central-bank commentary in the coming weeks could provide a clearer read on whether crypto demand can stabilize or resume a broader uptrend. For now, the combination of macro headwinds and ETF/derivatives outflows argues for continued caution in the near term.
