Firi Weekly: Prices Drop Amid U.S. Middle East Intervention

Geopolitical Crisis Hits Crypto:
- U.S. bombing of Iranian nuclear sites sends Bitcoin tumbling to $98,400 while Ethereum crashes 12.3% in weekend selloff.
Stablecoin Bill Sparks Rally:
- Senate passes GENIUS Act, propelling Circle's stock higher as regulatory clarity emerges for the stablecoin sector.
Ethereum Staking Peaks:
- Record 35 million ETH staked (28.3% of total supply) signals strong holder conviction.
BlackRock's Bitcoin Grab:
- World's largest asset manager now controls 3.25% of all Bitcoin through its ETF holdings.

Last Week’s Big Three

The U.S. Attacks Iranian Nuclear Facilities: Early Friday, June 13th, Israel launched strikes against Iranian nuclear facilities and military targets to disrupt Tehran's weapons program. Iran quickly retaliated with ballistic missiles and drone attacks, triggering ongoing exchanges between both nations. Sunday night marked a dramatic escalation when the U.S. bombed three Iranian nuclear sites, putting American forces in direct conflict with Iran.

Markets had feared this worst-case scenario since hostilities began ten days ago. Risk assets sold off sharply over the weekend as investors fled to safety—Bitcoin plunged to $98,400 while Ethereum tumbled to $2,130. This morning's market open saw continued selling pressure across high-risk assets as geopolitical uncertainty spiked.

It Is GENIUS: The U.S. Senate overwhelmingly approved the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act on Tuesday with strong bipartisan support. The bill now moves to the House of Representatives, where President Trump has urged swift passage, hoping to sign it by August. The GENIUS Act establishes a regulatory framework for U.S. stablecoin issuers, aiming to protect consumers through reserve requirements and transparency mandates.

The legislation provides much-needed regulatory clarity, helping to legitimize the stablecoin sector. With the bill in place, traditional financial institutions can enter the stablecoin market with greater confidence, potentially accelerating the adoption of decentralized finance applications. Enhanced consumer protections could attract mainstream users previously wary of crypto. Circle, issuer of USDC (the second-largest stablecoin), surged 33.8% following the bill's passage, reflecting market optimism about regulatory progress.

Ethereum Is Staked: Staked Ether reached an all-time high last week, surpassing 35 million ETH—28.3% of total supply.

This milestone reflects growing confidence among holders, who often view staking as a long-term commitment, as unstaking requires time and prevents immediate selling.

Behind the Charts

Chart 1: Bitcoin and Ethereum Prices Last Week

Bitcoin fell 4.8% while Ethereum plummeted 12.3% last week, with most losses occurring during the weekend following U.S. strikes on Iran. From Friday's U.S. equity close to Sunday's forex open, Bitcoin dropped 3.3% and Ethereum sank 9.3%. Our analysis shows this was Bitcoin's fifth-worst weekend performance over the past year—significant but not unprecedented.

Chart 2: Daily Bitcoin Exchange Netflow

Weekend trading saw nearly 3,000 bitcoins flow into exchanges as panicked investors rushed for exits. This contrasts sharply with the substantial month-long outflow trend, which typically signals long-term accumulation rather than immediate selling pressure.

Chart 3: USD and EUR Interest Rates

The Federal Reserve (Fed), the U.S. central bank, held dollar rates steady at 4.25%-4.5% during Wednesday's meeting, maintaining its wait-and-see approach for 2025. Meanwhile, the European Central Bank (ECB) has already cut rates three times this year, reflecting Europe's weaker inflation pressures.

Lower rates typically boost risk assets like crypto by encouraging yield-seeking behavior. However, the Fed's increasingly hawkish inflation outlook dampens this effect. Officials raised their 2025 inflation forecast to 3% from March's 2.7% projection, citing uncertainty around President Trump's tariff policies.

A Number to Remember

3.25%

BlackRock's IBIT ETF now owns 3.25% of Bitcoin's total supply—over 680,000 bitcoins. This remarkable accumulation occurred in just 18 months since the ETF's January 2024 launch, underscoring institutional appetite for digital assets.

On Our Radar

On our radar for the week ahead:

How Will Iran Respond? Markets remain on edge watching for Iran's response to U.S. strikes. The retaliation method matters critically—Iran could demonstrate force while avoiding further escalation. Historical precedent exists: after the U.S. killed General Soleimani in January 2020, Iran struck U.S. bases in Iraq causing damage but no casualties, signaling measured restraint.
Circle’s Stock Soars—Can the Stablecoin Hype Last? Wall Street's stablecoin frenzy shows no signs of slowing. Circle's stock exploded from its June 5 NYSE listing at $31 to Friday's $240.28 close—a staggering 675% gain. It remains to be seen whether this momentum can survive escalating geopolitical tensions in the days ahead.
All Eyes on Powell: What Will He Signal to Congress? Federal Reserve Chair Jerome Powell testifies before Congress this week—House Financial Services Committee on Tuesday, Senate Banking Committee on Wednesday. Markets will parse his comments for further clues about how Trump's tariff policies might impact inflation and rate decisions.

Mads Eberhardt23/06/2025