Bitcoin Drops to $62,800 on Mideast Tension as ETF Inflows Return
Bitcoin fell below $63,000 alongside global equities as U.S. strikes on Iran spiked oil prices, but on-chain data suggests institutional buyers are using the dip to accumulate.
Bitcoin dropped below $63,000 to trade at $62,836 on Friday, tracking a broad sell-off in global risk assets triggered by U.S. military strikes on Iran. The token slipped under its 50-day simple moving average, extending a 1.4% decline from Thursday.
The geopolitical shock rippled through equities and commodities. Japan’s Nikkei 225 fell 4% to enter a correction, while the Shanghai Composite dropped 3.1% to an 11-month low. Nasdaq futures pointed to a 1.6% decline as chipmakers including Nvidia and Broadcom came under pressure, and WTI crude climbed near $79 a barrel.
Washington added to the uncertainty after President Donald Trump declassified intelligence alleging Chinese interference in U.S. elections, including the acquisition of 220 million voter records. China’s embassy denied the allegations. While traders viewed the dispute as carrying little direct market weight, the focus remained on oil prices and the potential for inflationary pressure to disrupt the Federal Reserve's rate path.
“The inflation and liquidity channel is doing more work here than the geopolitical hedge narrative,” said Nicolai Sondergaard, a research analyst at Nansen. He pointed to a softer-than-expected June CPI report, which showed headline inflation at 3.5% against a 3.8% forecast and a core reading of 2.6% against 2.9%.
That data pulled the odds of a rate hike at the July 28-29 Federal Open Market Committee meeting from above 40% down to the low teens. “The FOMC meeting on July 28 to 29 is the actual binary,” Sondergaard said. “If the CPI data holds and the Fed signals a credible pivot path, the conditions for sustained ETF inflows are back in place.”
On-chain metrics indicate that institutional investors are already positioning for that outcome. Spot bitcoin ETFs drew $510 million across three sessions this month, halting a $2.73 billion outflow streak, with BlackRock’s IBIT leading the way.
Large wallets also held their ground during the initial shock. “Net outflows hit -18.3 BTC in the strike hour, then reverted to a post-shock average of +0.67 BTC per hour, meaning buyers returned within the same session,” Sondergaard said.
Market positioning further supports a constructive outlook. Funding rates sit near zero, indicating leveraged longs are not crowded, and both retail and smart-money traders maintain net-long ratios without rotating into stablecoins.
“Prior Middle East escalations produced the same pattern: short-duration flush, accumulation resumes,” Sondergaard said. “MVRV sits at 1.205 with realized price at roughly $53,000 and the long-term holder cost basis around $49,900, which defines the structural floor. That is not the profile of a market running on geopolitical sentiment.”
