Bitcoin Reclaims $108,000 Amid Middle East Tensions and US Rate Cut Shifts

Bitcoin (BTC) has shown remarkable resilience, reclaiming the $108,000 mark on Monday after retesting the $104,000 support level over the weekend. This surge came amidst escalating tensions in the Middle East and a shift in investor expectations regarding interest rate cuts in the United States, indicating a strong belief in Bitcoin’s potential for further gains.

Despite the worsening socio-economic outlook, traders' sentiment remained stable, as evidenced by Bitcoin derivatives metrics. The Bitcoin futures premium reached 5% on Monday, which is considered the baseline for neutral markets. This premium typically ranges from 5% to 10% to account for the longer settlement period. The market's resilience was further demonstrated by the lack of significant reaction during the $101,000 retest on June 5.

US-listed spot Bitcoin exchange-traded funds (ETFs) experienced $301.7 million in net inflows on Friday, and an additional $1.05 billion purchase was announced on Monday. These inflows helped alleviate traders' concerns about a potential economic recession and the adverse effects of the conflict involving Iran, a major oil producer.

Oil prices initially spiked on Sunday, with West Texas Intermediate (WTI) futures reaching $78 before retreating. By Monday, WTI futures had dropped to around $71.50 per barrel, coinciding with a 1.5% gain in Nasdaq futures. Market participants anticipate that tensions in the Middle East will ease, contributing to the overall market stability.

However, Bitcoin's path to reclaiming $110,000 may face challenges due to rising energy costs and delayed Federal Reserve rate cuts. Analysts have pointed out the risk of escalating energy prices, which could dampen market sentiment. Additionally, the likelihood of the Federal Reserve maintaining interest rates at 4% or higher by November has increased to 63%, up from 56% a month earlier, reflecting heightened uncertainty and inflationary pressures.

Bitcoin traders' growing confidence was also evident in the options market, where the 25% delta skew (put-call) dropped to a neutral 1% on Monday, after reaching 6% on Sunday. Readings above 5% are generally seen as bearish, indicating higher demand for protective put options from market makers and arbitrage desks.

Despite mounting uncertainty and recession fears, Bitcoin is trading just 4% below its all-time high of $111,965 from May 22. Derivatives metrics remain neutral, favoring further price appreciation as bears have failed to trigger panic amidst escalating global tensions. Ultimately, Bitcoin’s path to $112,000 remains closely tied to reduced tariff-related uncertainty, regardless of developments in the Middle East.