Bitcoin spot ETFs saw a sudden reversal on Thursday, with net outflows totaling $225.2 million, ending a week-long streak of inflows that had brought in nearly $1 billion. This sharp withdrawal was driven largely by BlackRock’s IBIT fund, which alone lost $202.5 million in a single session.

Massive ETF Outflows Shake Market Confidence

After steady inflows since July 13, Thursday marked the first day of significant losses for Bitcoin ETFs. Despite the one-day setback, the funds still posted a weekly gain of roughly $274 million. Apart from BlackRock’s IBIT, other funds like Fidelity’s FBTC, Bitwise’s BITB, ARK 21Shares’ ARKB, Franklin Templeton’s EZBC, and WisdomTree’s BTCW experienced moderate outflows. Morgan Stanley’s MSBT was the lone exception, seeing an inflow of $5 million.

Geopolitical Conflict Dampens Bitcoin and Stock Markets

The context for this ETF sell-off was a drop in U.S. stocks as tensions between the U.S. and Iran intensified, now persisting into the fifth month. Brent crude oil prices hovered at elevated levels, stirring fears of rising inflation and speculation around potential Federal Reserve rate hikes. Bitcoin’s price briefly fell below $65,000, hitting a low of $64,600 amid a bearish technical setup known as a death cross, where short-term moving averages dip below long-term ones, often signaling a downtrend.

The Crypto Fear & Greed Index mirrored this sentiment slump, falling to 28, the month’s lowest reading. Analyst Ali Charts highlighted $63,800 as a critical support level for Bitcoin. Should it hold, a rebound toward $67,000 may be feasible; if broken, the price could slide to $60,000.

Temporary Pause in U.S. Military Action Adds Complexity

Former President Trump intervened with an order pausing U.S. strikes on Iran after 13 continuous days of military action. This ceasefire coincided with diplomatic talks in Tehran between Omani and Iranian officials aimed at reopening strategic maritime channels like the Strait of Hormuz. Nonetheless, instability persists. The continued involvement of Houthi forces near the Bab al-Mandab Strait is disrupting vital shipping lanes, adding another layer of uncertainty.

Despite these developments, Bitcoin currently trades flat around $64,300, showing little movement amid the geopolitical noise. Meanwhile, Ethereum ETFs went against the grain, posting $26.3 million in inflows on the same day.