After a mighty start to the week, Bitcoin (BTC) fell almost 5%, along with the S&P 500, DOW, Nasdaq and Gold. On the other hand, crude oil rose 7.30% and rose 53% since the start of the war between the United States and Israel and Iran on February 28.
The collective market weakness highlights a coordinated shift in capital flows as the war in the Middle East continues, with outflows from S&P 500 and Nasdaq 100 ETFs increasing, further emphasizing investors’ decision to de-risk.
The exodus of capital is taking place in all investment markets
Kobeissi’s letter reported a combined $64 billion outflow from the S&P 500 ETF (SPX) and Nasdaq 100 ETF (QQQ) over the past three months, the largest on record.
This reverses the $50 billion inflow seen in November and results in outflows of up to 5% of total assets under management.
Bitcoin spot ETFs reflect broader market weakness, recording outflows of $253 million over the past two days.
During monthly ETF flows stay positive at $1.48 billion, this contrasts with cumulative outflows of $6.3 billion in the November-February period, underscoring the frail recovery in investor demand.
Glassnode data suggests the market struggles to absorb the selling pressure. Net profit taking briefly accelerated to around $17 million per hour (24-hour average) before losing momentum, after which the BTC price fell back below $70,000. Glassnode added,
“Wider geopolitical uncertainty appears to be reducing the depth of demand, limiting the market’s ability to absorb even moderate realization events.”
Related: Market analyst sees further flaws in Bitcoin and sees 60,000 as a key level. dollars
War-influenced market cycles shape BTC price action
Market participants are assessing Bitcoin’s movement in the context of past geopolitical events, drawing parallels between the current U.S.-Israel war with Iran and the Russia-Ukraine war in 2022.
Coincidentally, this happened in February four years apart, cryptocurrency commentator Carlitosway excellent that after Russia attacked Ukraine on February 24, 2022, Bitcoin initially oversold and then experienced a 24% rebound over the next four weeks. The momentum slowed shortly thereafter as BTC fell another 64% by November 2022.
A similar sequence is taking place this month, with BTC rising almost 10% at one stage since the war began last week, but momentum is now slowing.
Carlitosway linked this weakness to continued liquidity pressures, rising energy costs and continued forced selling during periods of stress, all of which reduce further demand for Bitcoin.
This pattern indicates a more prolonged stabilization phase during which recovery may take some time as capital rebuilds and selling pressure subsides.
Finish cryptocurrency analyst he believed that Bitcoin’s recovery path may occur after a price low around $55,000. The analyst added,
“I honestly think that until the Iran war is resolved, BTC dollar growth will be difficult. The environment is risk-free, SPX has lost trillions of capitalization, which leads me to a more neutral stance.”
Related: What will happen to Bitcoin if the price of oil reaches $180 per barrel?
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