Bitcoin Slumps Below $103K as Israel-Iran Conflict Triggers Global Risk-Off Sentiment

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Middle East Situation

Summary:

Bitcoin and other cryptocurrencies tumbled as Israel launched preemptive airstrikes on Iran, intensifying Middle East tensions and sparking a global shift away from risk assets toward safe-haven investments....

Bitcoin Reacts to Geopolitical Shock

Bitcoin fell sharply in early Friday Asian trading, dropping over 3% to below $103,000 before stabilizing around $103,540. Ether, the second-largest cryptocurrency, plunged as much as 7.6% at one point. The sharp decline coincided with news that Israel had carried out airstrikes on Iran, prompting fears of an escalating military conflict.

The Israeli government declared a special state of emergency, with Defense Minister Israel Katz warning of imminent retaliatory missile and drone attacks from Iran. This sudden geopolitical escalation triggered a broad flight from risky assets, including cryptocurrencies.

Flight to Safety Overrides Crypto Hedge Narrative

While Bitcoin has often been touted as a hedge against inflation or geopolitical instability, the market’s reaction underscores a different reality in times of acute crisis. Caroline Mauron of Orbit Markets noted that Bitcoin's behavior is aligned with other risk-sensitive assets, while FalconX's Sean McNulty emphasized that liquidity takes precedence in such moments, as traders prioritize cash and safe-haven currencies like the U.S. dollar over speculative or volatile positions.

This shift was reinforced by the liquidation of over $1 billion worth of long positions across the crypto market within 24 hours, according to Coinglass data. The sharp unwinding highlights how leveraged positions in crypto remain vulnerable during macro-level shocks.

Global Risk Sentiment Weakens Across Markets

The crypto selloff mirrors broader financial market reactions. Equity index futures dropped globally, oil prices surged over 9%, and gold climbed as investors moved to historically safe assets. Yields on U.S. Treasuries declined as demand for low-risk government bonds rose, adding to the overall narrative of investor caution.

Tony Sycamore of IG warned that sentiment could deteriorate further as markets brace for potential retaliatory moves by Iran. With weekend trading typically more illiquid in crypto markets, volatility could persist or worsen depending on geopolitical headlines.

Outlook and Key Levels to Watch

Market analysts are closely watching the $101,000 level as a possible support for Bitcoin, but emphasize that near-term price action will be driven almost entirely by developments in the Israel-Iran conflict. While some long-term investors may view pullbacks as entry points, in the short term, crypto markets are firmly under the influence of global risk aversion.

In this environment, Bitcoin is once again proving that it is not a pure safe-haven asset, but one deeply entwined with broader market sentiment—particularly when fear eclipses fundamentals.

Source: Bloomberg

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Economic

Stocks

Geopolitical Shock Hits Asia-Pacific Equities

Asian financial markets responded with sharp declines on Friday, following Israel’s military strike on Iran aimed at disabling its nuclear infrastructure. Japan’s Nikkei 225 fell 1.28%, while South Korea’s Kospi dropped 0.83% and the smaller Kosdaq slumped nearly 1.82%. China's Shanghai Composite and Hong Kong’s Hang Seng also registered notable losses. In contrast, Australia’s S&P/ASX 200 remained relatively flat, showing signs of regional divergence in risk sensitivity.

This market movement reflects investors’ concerns about a broader conflict in the Middle East that could severely disrupt global trade and energy markets. Israel's defense minister warned of imminent Iranian retaliation, further heightening uncertainty.

Oil Prices Surge as Supply Risk Rises

Brent crude surged more than 10% to $76.48 per barrel, while WTI crude jumped 10.21% to $74.99. The spike reflects traders pricing in supply disruptions, especially fears that Iran could retaliate by disrupting shipping through the Strait of Hormuz—a critical artery for global oil exports.

Analysts, including Saul Kavonic from MST Marquee, noted that markets had been discounting geopolitical risk for much of the past year, and the latest developments serve as a wake-up call. He suggested that the attacks might also be a political maneuver to influence U.S.-Iran nuclear negotiations, with a possible path toward de-escalation still open.

Safe Havens Climb Amid Escalating Conflict

Gold prices advanced above $3,429 an ounce as investors turned to traditional safe haven assets. U.S. Treasury yields fell across the board—10-year down to 4.347%, 2-year at 3.899%, and 30-year dropping to 4.833%—indicating increased demand for sovereign debt amid risk-off sentiment.

Bitcoin and Ether also slipped sharply, down over 3% and 7% respectively, showing that even decentralized assets are not immune to global fear-driven selloffs.

Futures Drop After Strong Thursday Close

Despite a strong session on Thursday—lifted by cooler-than-expected U.S. inflation and PPI readings—U.S. stock futures tumbled in after-hours trading. Dow futures plunged over 600 points, while S&P 500 and Nasdaq 100 futures each fell by about 1.6%, reversing earlier optimism. The S&P 500 had closed just 2% shy of its all-time high, buoyed by tech gains and strong sentiment.

Nevertheless, concerns about U.S. trade policy continued to weigh on the outlook. Treasury Secretary Scott Bessent hinted at extending the current tariff pause beyond July 9 if trading partners cooperate, but President Trump’s rhetoric around unilateral tariffs added to global trade tensions.

Investor Sentiment Fragile Amid Mixed Economic and Political Signals

The American Association of Individual Investors (AAII) survey showed a drop in bearish sentiment, but the current Middle East situation could easily reverse this shift. Market watchers are now closely monitoring how much further the conflict may escalate and whether it will disrupt oil infrastructure or draw in additional nations.

With the University of Michigan’s consumer sentiment report for June expected soon, the key question is whether households will also begin to reflect the same geopolitical anxiety now gripping global markets.

Unless rapid diplomatic de-escalation occurs, financial markets may face a period of heightened volatility. Energy stocks will likely continue outperforming, while sectors exposed to global trade and transportation may suffer. Gold and Treasuries will remain in demand as investors hedge against geopolitical chaos, rising inflation risk, and economic uncertainty.

Source: CNBC

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Middle East Situation

Escalation in the Middle East Spurs Market Turbulence

In a dramatic turn of global events, Israel’s airstrike on Iran sent shockwaves through financial markets Thursday night, triggering a sharp decline in U.S. stock futures and a surge in oil prices. Dow Jones Industrial Average futures dropped by 611 points (1.4%), while futures tied to the S&P 500 and Nasdaq 100 each fell about 1.6%. The swift sell-off was fueled by Israel’s declaration of a “special state of emergency” as fears of retaliation and regional escalation intensified.

While U.S. officials emphasized that Washington was not involved in the Israeli operation, markets responded with flight-to-safety behavior. Brent crude spiked over 7% to reach its highest levels since early April, and gold extended gains above $3,420 per ounce. The Swiss franc and Japanese yen also saw renewed demand.

Investor Sentiment Shifts Amid Geopolitical and Economic Crosscurrents

Prior to the strike, investor optimism had been buoyed by softer U.S. inflation data. The May Producer Price Index rose just 0.1%, below expectations, bolstering confidence in the likelihood of Federal Reserve rate cuts later this year. Combined with the earlier subdued Consumer Price Index reading, these figures helped the S&P 500 edge closer to its February all-time high, finishing Thursday up nearly 0.4%.

Despite the positive economic indicators, geopolitical risk has now become the dominant force in market direction. The White House’s unclear tariff policy further contributed to investor anxiety. Treasury Secretary Scott Bessent signaled that the 90-day tariff pause for trading partners might be extended if “good faith” negotiations continue, but President Trump’s comments about unilateral tariffs against Japan, South Korea, and potentially the EU sowed additional uncertainty.

Retail Investors Shift Sentiment as Risk Rises

The latest survey from the American Association of Individual Investors (AAII) revealed the least bearish sentiment since January, with just 33.6% of respondents expressing a negative six-month outlook. However, bullish sentiment remains below the historical average, suggesting that while pessimism has waned, confidence is still tepid—especially in light of Thursday night's developments.

Energy stocks have clearly benefited from rising crude prices. ConocoPhillips surged 8.6%, APA Corp rose 7.8%, and Halliburton advanced 7.1% over the week. In contrast, the industrials sector lagged, with United Airlines dropping over 8% and GE Aerospace sliding 6.1%, signaling growing caution in transportation and manufacturing sectors sensitive to geopolitical instability.

Volatility Expected Ahead of Weekend

As investors digest the geopolitical consequences of Israel’s strike, heightened volatility is expected going into the weekend. A potential retaliatory response from Iran and its implications for U.S. interests in the region could trigger further risk aversion. While U.S. officials deny involvement, market pricing suggests that fears of escalation and contagion—especially in energy supply chains—are real and growing.

With preliminary June consumer sentiment data from the University of Michigan due soon, investors will also be watching how households perceive these global uncertainties, and whether confidence holds amid intensifying market headwinds.

Source: CNBC

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Clarification on U.S. Treasury Holdings Amid Trade Tensions

Japan’s Finance Minister Katsunobu Kato stated on Friday that despite ongoing tariff talks between Tokyo and Washington, there have been no specific discussions about Japan’s substantial holdings of U.S. Treasury securities — the largest in the world — with his American counterpart, Scott Bessent.

This statement directly contradicts domestic reports that Prime Minister Shigeru Ishiba had suggested to opposition leaders that the subject was broached during recent negotiations. Kato clarified at a press conference that the issue of Japan’s holdings was a matter between himself and Secretary Bessent, and no concrete deliberations had taken place.

Previous Controversy and Strategic Importance

The remarks come weeks after Kato triggered market anxiety by suggesting Japan’s Treasury holdings could be a “card” in trade negotiations. Although he quickly backtracked, emphasizing that Japan had no intent to weaponize its bond portfolio, the statement spotlighted the geopolitical leverage embedded in sovereign bond ownership.

On Friday, Kato reaffirmed that Japan maintains its vast holdings for practical and strategic purposes, primarily to ensure ample liquidity for foreign exchange operations aimed at stabilizing the yen. Amid recent dollar volatility and safe-haven movements, Japan’s Treasury reserves serve as a financial anchor rather than a political instrument.

Implications for U.S.-Japan Relations and Markets

With over $1 trillion invested in U.S. government debt, Japan’s position is not only a stabilizing force in global bond markets but also a symbol of trust in the U.S. financial system. Any perception that Japan might liquidate holdings for political reasons could disrupt global capital flows, increase U.S. borrowing costs, and inflame bilateral tensions.

Kato’s reaffirmation of the apolitical nature of Japan’s reserves is likely aimed at calming markets already rattled by geopolitical tensions in the Middle East and uncertainty over U.S. fiscal policies.

Kato’s comments reiterate Tokyo’s long-standing policy of viewing its U.S. Treasury investments as tools for financial stabilization, not as tactical leverage. As tariff negotiations continue, Japan appears committed to separating currency and bond management from the political arena, signaling continuity and stability in its approach to international finance.

Source: Reuters

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Forex

Safe-Haven Demand Surges on Middle East Escalation

Currency markets sharply reversed direction in early Asian trading after news broke that Israel had launched military strikes on Iran’s nuclear infrastructure. The resulting wave of risk aversion drove investors back into safe-haven assets, lifting the U.S. dollar index by 0.4% to 98.07. The Japanese yen and Swiss franc also saw renewed demand, while risk-sensitive currencies fell sharply.

The dollar slipped 0.35% to 143 yen, highlighting a preference for Japan’s low-volatility currency amid turmoil. Meanwhile, the Swiss franc climbed, strengthening 0.39% to 0.807 per dollar, as its reputation as a financial safe harbor attracted renewed flows.

Flight from Risk Hits Aussie and Kiwi

By contrast, currencies typically linked with global growth and commodity demand — such as the Australian and New Zealand dollars — both lost 0.9%, reflecting market aversion to perceived risk assets. The sudden geopolitical flare-up adds fresh uncertainty to already fragile sentiment, which had been shaped earlier in the week by disappointing reactions to a U.S.-China trade deal and soft U.S. inflation data.

While the dollar had weakened earlier this week on expectations of aggressive Federal Reserve rate cuts, the latest developments are injecting a new dynamic into currency markets. Investors are now recalibrating portfolios with an eye on geopolitical safety rather than purely interest rate differentials.

Despite the rebound, the dollar remains on track for weekly declines against several major currencies — including the euro, yen, and franc — due to broader macroeconomic factors such as slowing inflation and declining consumer spending in the U.S.

Oil and Gold Reflect Broader Risk Aversion

Parallel to the currency market moves, gold prices climbed 0.8%, reaching their highest level since early May, while Brent crude jumped more than $4 per barrel. These gains reflect heightened investor concern over potential disruptions to Middle Eastern oil supply chains, particularly if Iran retaliates or if shipping routes like the Strait of Hormuz come under threat.

This latest surge in the dollar and traditional safe havens illustrates how geopolitical risk can swiftly override economic fundamentals. Although inflation pressures are easing and rate cuts remain on the table for the Federal Reserve, financial markets are now focused on the risk of escalation between Israel and Iran. Investors will be watching closely for signals of further military developments or diplomatic interventions that could shift global sentiment yet again.

Source: Reuters

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FastBull Featured

Daily News

[Quick Facts]

1. Pre-Trump tariff surge in global trade gradually fades.

2. Trump seeks to raise costs of challenging his policies, including the "One, Big, Beautiful" tax bill.

3. Trump suggests higher auto tariffs to further shield domestic industry.

4. US informs Israel it won't participate directly in actions against Iran.

5. Israel launches airstrike on Iran; Israel Defense Minister declares national emergency.

6. Trump says Israel may strike Iran; Israeli official suggests Action possibly by Sunday.

7. May U.S. PPI inflation remains tepid, further cementing September rate cut expectations.

[News Details]

Pre-Trump tariff surge in global trade gradually fades

The International Monetary Fund (IMF) indicated there are signs that the surge in trade and economic activity spurred by efforts to front-load shipments ahead of U.S. President Donald Trump’s tariffs is beginning to fade, with the global economy still facing high uncertainty. IMF spokesperson Julie Kozack said at a press briefing on Thursday that recent U.S. tariff-reduction deals with the U.K., combined with the White House’s April 9 decision to postpone some of Trump’s high tariffs, represented "it's a little bit of a positive sign for economic activity." However, she noted that data showing slowing activity, coupled with the doubling of U.S. steel and aluminum tariffs, painted a "complicated picture."

Trump seeks to raise costs of challenging his policies, including the "One, Big, Beautiful" tax bill

U.S. President Donald Trump and his allies are pursuing an alternative strategy to counter a growing wave of court orders blocking his policies: increasing the financial burden on those who sue his administration. House Republicans aim to compel people suing the U.S. government to post financial security covering the government's costs if they win a case seeking a preliminary injunction halting a Trump policy but ultimately lose the underlying lawsuit. The measure, tucked into their "one, big, beautiful" bill, would condition a judge's ability to hold U.S. officials in contempt proceedings for violating its orders on the payment of such security.

Trump suggests higher auto tariffs to further shield domestic industry

U.S. President Donald Trump suggested he may raise U.S. tariffs on automobiles to bolster domestic manufacturing, a move that could further inflame tensions with trading partners. Trump made the remarks Thursday during a bill signing ceremony for legislation overriding California's 2035 ban on selling new gasoline-powered cars. This marked a long-sought victory for some automakers and oil companies who had criticized the regulations as unworkable. Stating that boosting the existing 25% auto tariff level could offer further protection for the domestic industry, Trump cited General Motors' plan to invest $4 billion in U.S. plants over the next two years to avoid tariffs. "And I might go up with that tariff in the not-too-distant future," Trump added. "The higher you go, the more likely it is they build a plant here."

US informs Israel it won't participate directly in actions against Iran

According to AXIOS, two U.S. sources and one Israeli source stated that the Trump administration has informed the Israeli government that the U.S. will not directly participate in any Israeli military strike targeting Iranian nuclear facilities. This would be a unilateral operation rather than a joint mission, at least regarding airstrikes and other offensive actions. Sources did not clarify whether the U.S. would provide logistical support (e.g., intelligence or aerial refueling). The U.S., Israel, and Iran are making preparations for possible scenarios, including a collapse in U.S.-Iran nuclear talks, Israeli attacks against Iran, and retaliatory strikes by Iran against Israeli and U.S. bases in the region, which may occur within approximately the next week.

Israel launches airstrike on Iran; Israel Defense Minister declares national emergency

International media reported that Israel carried out an airstrike against Iran on Thursday local time. While the exact target remains unclear, explosions were reported in Tehran. This attack marked Israel's direct strike against its largest and most heavily armed adversary without explicit U.S. backing.

It is unknown whether Israel had ordered strikes on Iranian nuclear facilities or whether the U.S. opposed this specific operation. On Thursday evening, sirens sounded nationwide across Israel. Israeli Defense Minister Katz declared a special state of emergency. Katz stated that heavy missile and drone attacks against Israel and its civilians are anticipated in the near future, following Israel's preemptive strike on Iran. An Israeli Defense Forces spokesperson announced that starting Friday morning local time, only "essential" activities would be permitted within Israel.

Trump says Israel may strike Iran; Israeli official suggests Action possibly by Sunday

U.S. President Donald Trump stated Thursday that Israel is "most likely" preparing to strike Iran. A senior Israeli official told The Wall Street Journal that such action could occur as early as Sunday unless Iran agrees to halt production of materials for nuclear weapons. The report indicates Israel may move militarily against its archrival within days to prevent Tehran's nuclear development, raising concerns it could trigger a regional war and prompt Iranian retaliation.

Trump reiterated Thursday his commitment to resolving tensions peacefully. " We remain committed to a Diplomatic Resolution to the Iran Nuclear Issue!" Trump posted on Truth Social. " My entire Administration has been directed to negotiate with Iran. They could be a Great Country, but they first must completely give up hopes of obtaining a Nuclear Weapon." he added. Regional tensions continue to escalate as U.S.-Iran nuclear deal talks remain deadlocked.

U.S. intelligence indicates Israel has been preparing to strike Iranian nuclear facilities. U.S. and Iranian officials are scheduled for a sixth round of talks in Oman on Sunday regarding Iran's escalating uranium enrichment program, according to officials from both nations and mediator Oman. On Thursday, the International Atomic Energy Agency announced Iran failed to comply with nonproliferation obligations, prompting Tehran to vow countermeasures. A senior Iranian official stated a "friendly country" had warned of a potential Israeli attack.

May U.S. PPI inflation remains tepid, further cementing September rate cut expectations

Data released by the U.S. Bureau of Labor Statistics shows that the May Producer Price Index (PPI) rose 2.6% year-on-year (YoY), matching market expectations. Month-on-month (MoM), PPI increased by 0.1%, below the forecasted 0.2%.

Wholesale energy prices remained largely flat, though gasoline prices climbed 1.6% MoM. Food wholesale prices rose 0.1% MoM in May after a 0.9% decline in April. Notably, egg prices, a closely watched category, increased 1.4%.

This data provides no justification for the Federal Reserve to consider interest rate hikes. In fact, absent the implementation of Trump-era tariffs, the Fed might even weigh rate cuts to stimulate economic growth.

[Today's Focus]

UTC+8 17:00 Eurozone April Seasonally Adjusted Trade Balance

UTC+8 20:30 Canada April Wholesale Sales Month-on-Month (MoM)

UTC+8 22:00 US June University of Michigan Consumer Sentiment Index (flash reading)

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Commodity

Middle East Situation

Middle East Conflict Sends Oil Prices Skyrocketing

Global oil markets erupted on Friday, with Brent crude rising $5.29 to $74.65 per barrel and WTI crude climbing $5.38 to $73.42 — both marking their highest levels in months. The immediate catalyst was Israel’s military action targeting Iran’s nuclear and missile infrastructure, an escalation that investors fear could spiral into a broader regional conflict.

Explosions in Tehran were confirmed by local media, and Iranian officials declared a state of emergency, with retaliatory action expected. Israel’s Prime Minister Benjamin Netanyahu said the strike targeted critical military and nuclear assets, increasing fears of a sustained confrontation between two of the region’s most influential powers.

Supply Risk Premium Back in Play

Although actual oil production has not yet been disrupted, analysts warn the psychological impact and the potential for escalation could drive further price increases. According to Saul Kavonic of MST Marquee, if the conflict leads to Iranian retaliation involving oil facilities or maritime routes — particularly the Strait of Hormuz — up to 20 million barrels per day could be at risk.

The Strait of Hormuz is the world’s most strategic chokepoint for crude oil, with roughly one-fifth of global oil consumption passing through it. Any move by Iran to restrict this route, whether through military or political means, could send prices soaring and reignite global inflationary pressures.

Markets React Sharply to Geopolitical Shock

Beyond oil, financial markets responded with broad risk-off behavior. U.S. equity futures fell sharply in early Asian trade, while demand surged for safe-haven assets like gold and the Swiss franc. The gold price, already elevated due to Fed rate cut expectations, extended its gains, climbing toward record highs.

Phillip Nova analyst Priyanka Sachdeva emphasized that while the U.S. has distanced itself from the attack, its military assets in the region remain vulnerable if Iran decides to retaliate broadly. The possibility of “contagion” — extending conflict to other oil producers such as Iraq, Saudi Arabia, or the UAE — further adds to the risk environment.

Trump Administration’s Calculated Distance

Despite calls for restraint, President Trump has maintained a hands-off stance, labeling Israel’s actions as unilateral. U.S. Secretary of State Marco Rubio reiterated Washington's non-involvement, while urging Iran not to provoke or endanger American personnel in the region. However, many analysts suggest that even limited U.S. involvement could dramatically escalate tensions and increase the likelihood of supply chain disruptions.

Friday's oil surge underscores the fragility of global energy markets when geopolitical flashpoints flare in key production zones. With limited spare capacity globally and supply-demand balances already tight, any protracted escalation in the Middle East could have lasting consequences. As traders brace for potential weekend developments and retaliatory threats, oil’s volatility is likely to remain elevated, with investors keeping a close watch on the Strait of Hormuz and the potential for spillover into global inflation and monetary policy recalibrations.

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