Bitcoin’s bullish start to the week and the subsequent pullback align with crypto fund flows and escalating geopolitical tensions in the Middle East.
Unlike in prior weeks, the U.S. investors did the heavy lifting compared to the EU and Asian counterparts.
The $1.44 billion early-week inflow followed by $829 million in outflows reflects position management rather than collapsing conviction, according to Nima Beni, founder of Bitlease. “Portfolio managers often put on positions early in the week, capture the move, and then trim risk before weekends or geopolitical uncertainty,” he told Decrypt. “That's not a crypto story—that's a capital markets story.”
Jonatan Randin, senior market analyst at PrimeXBT, pointed to escalating geopolitical risks as the primary driver of late-week outflows. “The Iran crisis intensified with IRGC officials confirming the Strait of Hormuz closure, oil broke above $85, and risk sentiment deteriorated across all asset classes,” he told Decrypt. “When geopolitical risk rises this quickly, institutions reduce exposure to risk assets, and crypto is no exception.”
Crude oil futures surged roughly 60% after the February 28 attack, hitting $119 per barrel, before correcting nearly 14% over the weekend to trade just above $102.
“Higher oil prices are putting pressure on U.S. equities and indices, and that pressure is now feeding directly into Bitcoin,” Georgii Verbitskii, founder of crypto investor app TYMIO, told Decrypt. “In the current environment, BTC is still behaving largely as a risk asset, so when equity markets weaken, crypto tends to follow.”
If the situation escalates, Bitcoin could face short-term selling pressure, said Illia Otychenko, lead analyst at CEX.IO. “The first reaction in financial markets is usually risk aversion. Investors tend to reduce exposure to volatile assets,” he told Decrypt.
Randin offered a more cautious outlook, noting Bitcoin was already showing weakness before the Hormuz crisis. “Bitcoin has asymmetric correlation with equities—it moves with stocks on the downside but doesn't capture the same upside,” he said. “Geopolitical escalation creates headwinds for risk assets broadly, and Bitcoin follows.”
Beni, however, framed the dynamic differently. “Institutions selling Bitcoin during Strait of Hormuz closure are the last generation of finance fighting structural irrelevance,” he said. “Bitcoin doesn't need permission from entities that control shipping lanes. That's exactly why those entities want Bitcoin priced as if it does.”
Experts unanimously echoed that if oil prices were to remain elevated amid the ongoing uncertainty, it could weigh on Bitcoin in the short term.
An indirect effect of high oil prices can influence inflation expectations and monetary policy, potentially leading central banks to hold rates steady—turning off investors' risk-on behavior and driving capital rotation out of volatile assets like Bitcoin and into safer alternatives such as bonds and gold.
Verbitskii echoed that outlook. “Since Bitcoin is already showing signs of structural weakness, that macro pressure could translate into additional downside for crypto if the broader market sell-off intensifies,” he said.
