Bitcoin ETFs See $1.3 Billion Inflows Amid Geopolitical Turmoil

Bitcoin exchange-traded funds (ETFs) have experienced a notable five-day inflow streak, with over $1.3 billion in capital moving into these investment vehicles. This period of inflows began on Monday, June 9, with over $386 million in inflows and continued through Friday, with an additional $301 million in inflows. This streak occurred despite recent geopolitical turmoil, notably the Israel-Iran conflict, which has caused significant disruptions in global markets.

The resilience of Bitcoin's price in the face of geopolitical tensions has been a key factor driving these inflows. Despite a roughly 3% drop in response to the Israeli airstrikes on Iran, Bitcoin has shown remarkable stability. Analysts attribute this resilience to the long-term factors influencing Bitcoin, such as the US dollar index (DXY), which has recently broken below 100, its lowest level in over three years. This trend suggests that the USD is weakening, which typically correlates with an increase in Bitcoin's value.

However, the analyst warned that risk-on assets, including Bitcoin, could face significant short-term price drops if Iran chooses to close the Strait of Hormuz. This narrow waterway is crucial for global oil supply, with 20% of the world's oil passing through it. Closing the Strait would cause a spike in energy prices, disrupting global markets and potentially leading to a full-blown regional war. Such a conflict would undoubtedly impact crypto markets and asset prices, adding to the geopolitical risks that investors must consider.

Despite these risks, Bitcoin's price has remained resilient, trading around $105,000 as of Friday. This is less than 6% away from its all-time high of $112,000 recorded on May 22. The price resilience has led some analysts to forecast a potential rally that could catapult Bitcoin to new all-time highs in the coming weeks and months. This optimism is fueled by ongoing macroeconomic uncertainty, high government debt, and the fracturing of legacy financial systems, which make Bitcoin an attractive alternative for investors seeking to preserve their savings.

The inflows into Bitcoin ETFs indicate growing institutional interest in the cryptocurrency, despite the ongoing geopolitical uncertainties. This trend is not limited to Bitcoin, as spot Ethereum ETFs also saw impressive performance, capturing over $240 million in net daily inflows on June 11. This marked the end of an 18-day positive inflows streak for Ethereum ETFs, which had been outperforming their Bitcoin counterparts. The inflows into Ethereum ETFs suggest that institutional investors are diversifying their cryptocurrency holdings, seeking exposure to both Bitcoin and Ethereum.

The inflows into Bitcoin and Ethereum ETFs come at a time when geopolitical tensions are on the rise. The US-China trade deal negotiations, Israel's strikes on Iranian military targets, and other geopolitical events have all contributed to market volatility. Despite these challenges, institutional investors continue to show interest in cryptocurrencies, as evidenced by the inflows into Bitcoin and Ethereum ETFs. This suggests that cryptocurrencies are increasingly being seen as a viable investment option, even in times of geopolitical uncertainty.