Bitcoin hovers below key ‘air gap’ as geopolitical risks and Fed outlook cloud direction

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Crypto markets are struggling to find direction as geopolitical tensions and shifting monetary expectations pull in opposite directions, leaving Bitcoin (BTC) pinned in a narrow range near $70,000.

Prices swung sharply over the past week, climbing to $76,000 before sliding to $67,000 and stabilizing into the weekend, according to Glassnode. The Block's prices page shows BTC currently changing hands for around $71,000 as markets digest the latest headlines.

'Taco rally' and Hormuz lockdown

The initial uptrend has now given way to a more cautious phase, with momentum cooling and positioning turning defensive across spot and derivatives markets.

A brief reprieve came on Monday after U.S. President Donald Trump signaled a pause in potential strikes on Iranian infrastructure, triggering what Pepperstone Senior Research Strategist, Michael Brown, dubbed a "TACO Monday" risk rally. Oil fell, and equities rebounded, while crypto followed higher.

However, that bounce proved fragile. Iranian officials denied talks had taken place, and the Strait of Hormuz remains effectively blocked, keeping pressure on global energy markets and inflation expectations.

Analysts said the back-and-forth is eroding confidence in macro signals.

"Repeated policy reversals are eroding the foundation of pricing, while unresolved war risks are pushing markets back under uncertainty-driven conditions," Bitunix analysts said.

Bitcoin has posted a more measured price reaction than in past risk-off episodes. The asset briefly dipped below $70,000 over the weekend but avoided the sharper drawdowns typically seen during periods of thin liquidity, suggesting lower leverage and steadier positioning.

Still, signs of cooling demand are building. Spot ETF inflows have slowed sharply from the prior week, with weekly flows dropping to around $152 million from more than $790 million, while trading volumes also declined.

Earlier data showed U.S. spot bitcoin ETFs snapping a three-day outflow streak with $167 million in inflows, even as Ethereum products continued to see redemptions.

Derivatives markets point to a similar shift. Open interest has edged lower, and cumulative volume delta has flipped negative. This confluence usually indicates renewed sell-side pressure. At the same time, options data shows growing demand for downside protection, a sign that traders are bracing for further volatility.

Onchain activity paints a subdued picture, too. Transfer volumes and network usage remain weak, while profitability metrics have compressed, leaving investors more sensitive to downside moves.

Next leg

Even so, institutional demand has not disappeared.

Analysts at Bitfinex said bitcoin’s ability to hold above its March opening level near $67,000 — even as equities slipped — points to continued high-conviction positioning. They argue that accumulation likely began before last week’s macro turbulence, rather than reacting to it.

The next test lies just overhead.

"A successful acceptance above $72,000 would open the path toward $82,000," the Bitfinex analysts said. They pointed to a thin liquidity zone where limited selling pressure could accelerate gains. Failure to break higher would likely keep bitcoin locked in its current range.

Macro conditions remain the dominant force. A hawkish Federal Reserve stance, rising inflation expectations, and escalating geopolitical risk are pulling liquidity from risk assets, even as longer-term narratives around bitcoin’s role as a neutral settlement layer gain traction.

For now, the market is trading on headlines. As Pepperstone’s Brown put it, the signal-to-noise ratio is "off the charts," with price action driven less by fundamentals than by rapid shifts in policy tone and developments in the war.

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