Middle East Tensions Weaken Cryptocurrency Demand

The cryptocurrency market is facing a period of weakness due to renewed loss of strength in short-term demand.

This uncertainty stems from a possible escalation of the conflict in the Middle East, which has increased the appeal of safe-haven markets such as bonds. As a result, other substitute markets appear more attractive than risk assets like cryptocurrencies.

The conflict around the Strait of Hormuz pushed the WTI oil barrel above $70 and increased caution over potential additional inflationary pressures. The bond market also saw an upward slope in 10-year U.S. bond yields, restoring its appeal compared to higher-risk assets.

This environment may have contributed to a slowdown in crypto demand. At the start of the week, Bitcoin ETFs recorded positive inflows exceeding $300 million, but as concerns over the conflict increased, flows turned negative on July 8, with outflows of more than $100 million.