Bitcoin (BTC) is slowly recovering, trading at $65,400 on Friday, above a crucial support level. Institutional investors have continued to put money into U.S.-listed spot Bitcoin exchange-traded funds (ETFs) through Thursday, marking three straight weeks of inflows, which has aided BTC’s recovery. However, concerns about rising oil prices—spurred by the escalating U.S.-Iran conflict—and new tariffs from President Trump are limiting the cryptocurrency’s upward movement.
Bitcoin rally stalls as inflation and trade war concerns reignite
The week began on a positive note for Bitcoin, with optimism around a potential easing of Middle Eastern tensions. Mediators suggested a 10-day ceasefire between the U.S. and Iran on Monday, which raised hopes for a peace agreement. During this period, Bitcoin surged, reaching a daily high of $65,956 on Tuesday, but that momentum faded as the week progressed. By Thursday, BTC had seen a 2.46% correction.
On Thursday, the U.S. military reported it had conducted more strikes against Iran, following 13 nights of operations. These actions come amid heightened tensions, with Iranian forces responding with attacks on U.S.-linked military targets in Kuwait, Bahrain, and Jordan. Moreover, the Iran-aligned Houthis extended the conflict by attacking two Saudi oil tankers in the Red Sea. This has raised concerns about potential energy supply disruptions, pushing oil prices up to $92.5 per barrel, the highest since June 11.
The recent surge in oil prices has reignited inflation worries, which is affecting market sentiment. The CME FedWatch tool indicates a rise in the probability of a July interest rate increase to 34.21%, up from 16.03% earlier in the week. This change suggests expectations that the Federal Reserve might adopt a more hawkish approach, which tends to put pressure on riskier assets like BTC.
Furthermore, the Trump administration’s plans to impose new tariffs of 10% to 12.5% on nearly all imports from 60 major trading partners is reviving fears of a global trade war and increasing inflation, further dampening traders’ appetite and slowing Bitcoin’s recovery.
Institutional demand shows some signs of optimism
This week, there are signs of modest institutional demand. The Spot BTC ETF registered inflows of $273.87 million up to Thursday, according to SoSoValue data. Should Friday show positive flows, BTC will achieve a third week of steady inflows.
This positive trend indicates that institutional investors are gradually returning, though the current inflows still seem relatively small compared to the significant outflows seen from mid-May to early July. If this trend continues, robust ETF demand could help buffer Bitcoin against ongoing geopolitical challenges.
Can a new ethics code pave the way for passage of the CLARITY Act?
On the regulatory front, Senate Republicans released what seems to be a near-final draft of the Digital Asset Market Transparency (CLARITY) Act this week. This has raised hopes that the long-awaited Cryptocurrency Market Structure Bill may move closer to passage before the summer recess.
The latest draft includes an ethics framework, with a proposal aimed at preventing presidents and senior officials from promoting digital assets for personal gain during their terms. This move is supposed to address potential conflicts of interest in areas where political and financial ambitions often collide.
As it stands, the restrictions on direct cryptocurrency links for officials will end in 2029, with enforcement falling to the DOJ through civil litigation. Officials will also be required to divest or place their holdings in a blind trust, and tokens that fail to comply will be barred from exchanges.
However, with lawmakers likely to focus on the upcoming U.S. midterm elections after summer, early August could be the last chance for the bill to navigate the legislative process. For those in the crypto sphere, passing this bill could offer a significant boost by clarifying regulations and bolstering institutional confidence in digital assets.
Technical outlook: Remains solid above key support zones
After finding support near the 200-week simple moving average (SMA) at $63,330, Bitcoin saw a slight rebound of over 1% on Friday, trading above $65,400. The cryptocurrency is extending its recovery, reexamining and finding support near an uptrend line established in late June, marking a fourth consecutive week of gains.
Bitcoin has surpassed the 200-day SMA of $63,330 and the immediate resistance at the 78.60% Fibonacci retracement level of $65,520. If it closes above $49,000, BTC could further its recovery towards the 61.80% level set at $78,490.
Momentum indicators on the weekly chart hint that bearish sentiment might be fading. The Relative Strength Index (RSI) is inching toward the neutral 50 level, currently at 40. Meanwhile, the Moving Average Convergence Divergence (MACD) has turned bullish this week, lending a positive outlook.
However, if Bitcoin cannot maintain support near the 200-day SMA at $63,330 and closes below that level weekly, losses may extend toward the uptrend support around $59,500.
On the daily chart, BTC retains a slight bullish bias, remaining above the 50-day exponential moving average (EMA) of $65,152. It still falls short of the 100-day EMA of $67,973 and the 200-day EMA of $73,950, which indicates that while it’s currently pulling back, the broader trend is constrained by those longer-term averages.
The daily chart shows an RSI of 55, which is positive without signals of being overbought. The MACD stays in positive territory, suggesting upward momentum is present but not yet robust enough to challenge resistance levels.
Initial support lies at the 50-day EMA of $65,152, with a more significant structural bottom forming at $64,004. A sustained breach of this latter level would weaken the current positive sentiment and expose Bitcoin to further declines.
On the upside, the first significant resistance appears near the 100-day EMA of $67,973, followed by the 200-day EMA of $73,950. A daily close above these significant moving averages could reinforce the bullish trend and set the stage for approaching horizontal resistance at around $84,410.
