Netizen Weekly | Bitcoin Market Update #19

Why War Accelerates Money Printing

Goldilocks Meets Geopolitics

Tensions in the Middle East escalated sharply this week as a U.S. national security meeting fueled speculation about imminent American military support for Israel's strikes on Iran. The U.S. entering the Israeli-Iran conflict would provide the government perfect justification for emergency spending and money printing to fund military operations and economic support. Oil momentum just flipped from NEUTRAL to BULLISH on our technical indicators, confirming that energy-inflation risks are materializing as we warned earlier this week. This geopolitical shock threatens to temporarily flip the current GOLDILOCKS (RISK-ON) market regime to STAGFLATION (RISK-OFF), but paradoxically would accelerate the very policy responses that fuel Bitcoin's long-term bull case. An Israeli-Iran conflict would only worsen America's debt crisis while providing political cover for massive fiscal expansion that governments historically embrace during times of crisis.

TLDR: War provides perfect political cover for money printing, accelerating the debt crisis that drives Bitcoin adoption as a monetary escape hatch.

Powell's Stagflation Admission

Today's Federal Reserve meeting delivered incrementally stagflationary projections: lower growth, higher unemployment, and higher inflation. The new Summary of Economic Projections showed 2025 real GDP growth slowing 30 bps to 1.4% (from 1.7%), unemployment rising 10 bps to 4.5% (from 4.4%), and core inflation rising 30 bps to 3.1% (from 2.8%) despite the Fed's 2% target. We believe the timing of interest rate cuts isn't the critical risk for forward-looking markets, it's who President Trump eventually names as Fed Chair to replace the hawkish Jerome Powell. An escalating Israeli-Iran conflict would provide perfect political cover for a new Fed Chair to embrace easier monetary policy while fiscal deficits explode.

TLDR: The Fed predicts stagflation while Trump's easy money agenda creates the perfect environment for Bitcoin's next explosive bull run.

Smart Money Positions for Stagflation

As markets grapple with the stagflationary risks from the Middle East conflict, the 30-day supply change data reveals sophisticated buyers positioning for monetary debasement. While 73% of coins were sold above $80K, an overwhelming 99% of coins were bought above $103K. This pattern shows profit-taking from earlier buyers while new capital enters at premium valuations, anticipating the policy responses we outlined in our macro analysis. The accumulation breakdown tells the real story: "Fish" (10-100 BTC) added +5.1K BTC, "Sharks" (100-1K BTC) accumulated +76.5K BTC, and mega-whales plus exchanges bought +2.3K BTC over the past month while all other cohorts were net sellers.

TLDR: Sophisticated buyers are front-running the war-driven money printing cycle, accumulating Bitcoin in anticipation of fiscal and monetary debasement.

ETFs Ignore Powell's Stagflation Warning

Bitcoin ETF flows tell a different story than Powell's cautious projections, with institutional and retail demand accelerating despite stagflationary headwinds. After two weeks of outflows totaling -$145M (June 1st week) and -$131M (June 8th week), flows reversed dramatically with +$1.4B inflows during the June 15th week followed by +$650M in the June 22nd week. This represents 8 positive weeks out of the last 10 while Bitcoin has traded within the $100K-$110K range, even as the Fed predicts slower growth and higher inflation. ETF buyers appear to be positioning for the very scenario our macro analysis outlined: easy money policies accelerated by geopolitical conflict and a potentially dovish Fed Chair replacement.

TLDR: ETF buyers are betting on the inflationary outcome of war spending and dovish monetary policy, using Bitcoin as their preferred inflation hedge.

Technical Pause Before Policy Acceleration

Our AVIV Momentum indicator suggests a tactical pause as markets digest both geopolitical tensions and Fed stagflation projections. The indicator peaked at 0.57 in late May but has since declined to 0.21 and appears to be trending towards zero. A negative crossover would shift our Bitcoin positioning to defensive mode, reducing dollar-cost averaging until momentum conditions improve. While this cooling momentum may be temporarily bearish, it mirrors the current GOLDILOCKS to STAGFLATION regime transition we described, which is a necessary consolidation before the next explosive move higher driven by fiscal spending and dovish Fed policies.

TLDR: On-chain momentum is cooling, but should accelerate and reverse once fiscal spending and easy money policies become reality rather than speculation.

Thanks for reading this week's note! See you next week – and as always, hit reply if you have any questions, comments, or suggestions!

Take care -Brian

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.