Bitcoin falls to $62,870 as US-Iran strikes and $7.7B stablecoin exit weigh

A dual shock of escalating Middle East conflict and a $7.7 billion stablecoin supply contraction drove Bitcoin to its lowest level in weeks, with no firm support above $57,800.

Bitcoin fell 3.8% to $62,870 on July 8 after US military strikes on Iran triggered a broad risk-off move across markets, while a simultaneous $7.7 billion contraction in stablecoin supply drained liquidity from the crypto ecosystem.

"The combination of geopolitical escalation and on-chain liquidity withdrawal creates a uniquely difficult environment for Bitcoin," said Nina Volkov, crypto macro analyst at Edgen. "ETF inflows have also weakened, removing a key source of demand that had supported prices above $65,000."

The total crypto market capitalization declined 1.24% as Brent crude surged 2.05% to $75.68 and the US dollar index reached its highest level this week, reinforcing the risk-off rotation. Bitcoin had failed to break above the $64,000 resistance level in prior sessions before the selloff accelerated. Open interest across major derivatives exchanges fell as funding rates turned negative, indicating bearish positioning among leveraged traders.

The $57,800 level now represents the last major support before a potential test of $55,000, a zone not visited since early June. With ETF flows showing no signs of recovery and stablecoin supply continuing to contract, the path of least resistance remains lower unless a de-escalation in the Middle East or a macro catalyst shifts the risk backdrop.

The stablecoin market cap has contracted by $7.7 billion over the past week, according to DefiLlama data, with USDT and USDC both seeing net redemptions. This represents one of the largest weekly outflows since the 2022 bear market and removes a critical layer of buying power. Stablecoin supply is a leading indicator of capital ready to deploy into crypto assets, and its contraction signals reduced demand at current levels.

Bitcoin ETF flows have also turned negative, with spot BTC ETFs recording net outflows of approximately $180 million over the past three trading sessions, according to data from The Block. The Grayscale GBTC product continued to see redemptions while inflows into BlackRock's IBIT and Fidelity's FBTC slowed. The weakening ETF demand removes what had been the primary marginal buyer of Bitcoin since the products launched in January 2024.

Oil prices rose 2% on the strikes, with WTI crude climbing to $71.90, while gold edged higher as investors rotated into traditional safe havens. Bitcoin's correlation with equities has reasserted itself during the selloff, with S&P 500 futures also declining, undermining the "digital gold" narrative that had gained traction during the regional banking crisis.

This article is for informational purposes only and does not constitute investment advice.