Geopolitics, Inflation, and Fed Outlook Shape BTC Trajectory
Bitcoin (BTC) fell 1.7% over the past 24 hours as geopolitical tensions in the Middle East escalated, rattling global markets and dragging risk assets—including crypto—lower. Despite the pullback, several analysts maintain that BTC remains on track to hit $200,000 before the end of 2025.
The broader CoinDesk 20 Index (CD20) also slipped, retreating 2.25%, as investors turned to traditional safe havens like gold and the Swiss franc in response to rising conflict risk.
Middle East Conflict and Dollar Weakness Weigh on Crypto
Concerns are mounting after the U.S. began repositioning personnel in the Middle East, citing heightened security risks. This follows reports that Israel may pursue military action against Iran, and confirmation from the International Atomic Energy Agency that Iran violated its nuclear obligations for the first time in two decades.
Investors responded by divesting from the U.S. dollar, causing a temporary uptick in safe-haven assets but also weakening sentiment around volatile markets like cryptocurrency.
“Bitcoin continues to trade like a classic risk-on asset,” said Boris Alergant, head of institutional partnerships at Babylon. “That said, the broader picture for BTC remains optimistic.”
Inflation Data Sparks Hopes of Fed Rate Cuts
On the macroeconomic front, U.S. inflation came in softer than expected, with core inflation steady at 2.8%. Traders are now increasingly pricing in two Federal Reserve rate cuts this year, beginning in September, according to the CME FedWatch tool.
Lower interest rates typically boost risk assets, and Bitcoin is no exception. If monetary easing materializes, crypto markets could regain upward momentum.
Long-Term Outlook Remains Bullish
Despite short-term headwinds, structural demand for Bitcoin continues to grow. Institutions are increasingly adopting BTC as a treasury asset, echoing the strategy pioneered by MicroStrategy.
“We’re seeing more firms follow the BTC treasury model,” said Alergant. “That’s creating a resilient demand floor for Bitcoin, regardless of short-term volatility.”
Conclusion: Caution in the Short Term, Optimism in the Long Run
While geopolitical uncertainty and macro crosscurrents are pressuring Bitcoin in the short term, market fundamentals and growing institutional adoption still support a bullish long-term outlook. The $200K BTC target by year-end remains in play, though not without volatility along the way.