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Crypto Majors Decline as Middle East Tensions Drive Flight to Safety
Escalating tensions in the Middle East have sparked a flight to safer assets, prompting traders to rotate out of altcoins and into stablecoins and bitcoin amid fears of U.S. military escalation and persistent inflation pressures.
Major cryptocurrencies slipped further on Thursday, while the U.S. dollar strengthened, as growing concerns about a broader regional conflict rattled markets.
XRP was down over 1% in the past 24 hours, trading at $2.1060. Cardano’s ADA fell to $0.5545, and Solana’s SOL dropped to $143.02. Dogecoin held flat on the day at $0.1608 but has shed more than 10% over the week, erasing gains from its early June rally. Meanwhile, ether declined 0.7% to $2,426.63, giving up its earlier weekly gains.
Despite the market turbulence, spot bitcoin ETFs in the U.S. attracted continued inflows, with over $389 million in new investment on Wednesday. Spot ether ETFs also saw positive flows, bringing in $19 million.
Investors remain on edge amid reports that U.S. officials are considering direct military strikes on Iran. Simultaneously, the Federal Reserve warned of a more entrenched inflation outlook, adding another layer of uncertainty to global markets.
Fed Chair Jerome Powell cautioned on Wednesday that geopolitical turmoil and tariffs could make controlling inflation more challenging. Although the Fed left interest rates unchanged, Powell underscored that the burden of tariffs ultimately “will fall on the end consumer” and said policymakers “need to see more” before moving toward rate cuts.
Altcoins, viewed as higher-risk assets, are typically the first to be sold off during times of heightened macroeconomic or geopolitical stress.
Bitcoin, meanwhile, remains trapped in a trading range. Although the flagship cryptocurrency is up 13% year-to-date thanks to ETF-driven inflows and a weaker dollar, it has struggled this week to establish itself firmly as either a safe-haven asset or a risk-on play.
“Bitcoin seems stuck between two worlds,” said Alex Kuptsikevich, analyst at FxPro. “It’s not responding to rising risk appetite, nor is it surging like gold during periods of heightened conflict.”
