Bitcoin drops below $66K as Middle East tensions spark volatility.
$6.39 billion ETF outflows show weakening institutional crypto demand.
BTC swings between $63K–$65K; traders watch support and rate policy.
Bitcoin (BTC) has slipped below the $66,000 mark as global markets react to escalating tensions in the Middle East.
The rising conflict between Iran, the US, and Israel has prompted a wave of uncertainty that is affecting risk assets, including cryptocurrencies.
Bitcoin, in particular, is showing sharp intraday swings in response to news developments.
Early trading saw BTC fall as low as $63,000 before it recovered to above $65,000.
This volatility reflects a mix of geopolitical fear and active liquidations in the derivatives market, with more than $130 million in long positions being forced to close and amplifying the downward pressure on the cryptocurrency.
The US, Israel, Iran war has sent shockwaves across markets
The current situation in the Middle East has made investors jittery.
Traditionally, Bitcoin has sometimes been viewed as a hedge during global crises, but recent behaviour shows it acting more like a risk asset.
Notably, Bitcoin’s price has been moving in close correlation with equities, particularly major stock indices, rather than holding steady in turbulent times.
Gold and oil, however, have seen upward movements, with oil prices surging amid anticipation of supply disruptions.
The price of Gold has also climbed modestly, reflecting its traditional safe-haven status.
These shifts indicate that money is flowing away from riskier assets like Bitcoin and toward instruments perceived as more stable during geopolitical stress.
Long-term BTC holders, however, are showing resilience.
After the initial sell-off, many investors took the opportunity to buy at lower levels, which contributed to a partial recovery.
This has prevented Bitcoin from falling as sharply as some other risk assets, demonstrating that there is still significant support at levels around $65,000.
Institutional demand weakens
US-listed spot bitcoin and ether exchange-traded funds have recorded sustained outflows over the past four months, pointing to a sharp cooling in institutional participation in digital assets.
Investors withdrew $6.39 billion from bitcoin ETFs during the period, the longest continuous monthly decline since the products launched in January 2024, according to SoSoValue data.
Ether ETFs also saw $2.76 billion in outflows.
The retreat coincided with a steep fall in token prices, with bitcoin dropping from above $126,000 in early October, while ether has fallen more than 60% from its August highs near $4,950.
Spot ETFs had previously served as a visible channel for institutional inflows after their debut and following pro-crypto political developments in 2024.
However, demand weakened after the October market downturn, reportedly linked to pricing inefficiencies on offshore exchange Binance.
Although recent sessions have seen intermittent inflows, analysts say a consistent return of capital is required for a durable recovery.
What this means for Bitcoin going forward
Traders should expect more volatility in the short term since Bitcoin is sensitive to headlines, and any further escalation in the Middle East could trigger additional sharp movements.
Traders should keep a close eye on the technical support level near $63,000, while resistance around $68,000 to $70,000 remains a key target for recovery.
Also, besides the Middle East war, monetary policy may also play a role in the next BTC price movements.
If central banks respond to the conflict with interest rate adjustments or liquidity measures, Bitcoin could benefit indirectly.
Historical trends suggest that geopolitical crises followed by rate cuts or monetary easing often support risk assets, and cryptocurrencies could be no exception.
