Crypto major coins faced a decline on Thursday as concerns over escalating tensions in the Middle East led to a rise in the dollar. XRP, Cardano's ADA, and Solana's SOL all experienced losses of over 1% in the last 24 hours, while dogecoin DOGE remained flat for the day but recorded a 10% decrease for the week, negating its gains from early June. Ether ETH also saw a 0.7% drop, erasing any previous gains made earlier in the week.
Bitcoin spot exchange-traded funds (ETFs) in the U.S. continued to see increased interest, with a total of $389 million in new investments on Wednesday, according to data. Spot ETH ETFs also saw positive flows amounting to $19 million.
Reports of possible direct action against Iran by U.S. officials and a warning from the Federal Reserve regarding the sustained inflation outlook contributed to a sense of unease among investors. This led to volatility in the equities market, as well as impacting cryptocurrencies and commodities.
Federal Reserve Chair Jerome Powell's comments on the potential effects of tariffs and global conflicts on inflation influenced market sentiments. Although the central bank decided to keep rates unchanged, Powell highlighted that the cost of tariffs would ultimately impact consumers, emphasizing the need for further monitoring before any rate adjustments.
Altcoins, known for their higher risk nature, are often the first to be affected during periods of broader economic stress.
Bitcoin's performance has remained stagnant, with the cryptocurrency seeing a 13% increase year-to-date. Despite receiving support from ETF investments and a weakening dollar, Bitcoin has not shown clear characteristics of either a safe-haven asset or a risk asset during the current week.
Analyst Alex Kuptsikevich from FxPro remarked, "Bitcoin appears to be caught in the middle, failing to respond to increased risk appetite or surge like gold in times of conflict."
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