Bitcoin declined 1.7% to $107,534.98 as of 4 p.m. ET Wednesday amid escalating Middle East geopolitical tensions, according to CoinDesk market data. The U.S. government's evacuation of personnel from the region and the International Atomic Energy Agency's ruling that Iran breached non-proliferation commitments triggered a flight to traditional safe havens. Gold futures surged 1.26% to $3,385.80 while the U.S. dollar index dropped 0.57% to 98.07. Concurrently, the CoinDesk 20 Index fell 2.25%, reflecting broad crypto market weakness. This risk-off shift occurred despite favorable U.S. inflation data showing core CPI stable at 2.8% year-over-year, which increased expectations for Federal Reserve rate cuts. The CME FedWatch tool indicates traders now price in two 25-basis-point cuts starting September, potentially benefiting risk assets longer-term. Boris Alergant, head of institutional partnerships at Babylon, noted bitcoin's sensitivity to macro developments, telling CoinDesk it continues trading as a classic risk-on asset. These competing forces create near-term volatility while sustaining the $200,000 year-end price target cited by multiple analysts. The S&P 500 declined 0.27% to 6,022.24 and Nasdaq dropped 0.50% to 19,615.88 on Wednesday, demonstrating correlated risk-asset behavior. Historical data from TheTie confirms bitcoin typically moves directionally with U.S. equities but exhibits higher volatility, evidenced by April's brief decoupling. Current derivatives positioning reveals heightened hedging activity, with bitcoin options open interest on Deribit reaching $36.7 billion this month. The put/call ratio of 0.60 shows moderate bullish bias, while June 27 expiry calls cluster at $140,000. Ether options open interest hit a yearly high of $6.87 billion with a 0.45 put/call ratio indicating stronger upside conviction. Futures funding rates remain elevated but sustainable at 8.12%-12.84% APR across major exchanges, per Velo data. Trading correlations show bitcoin's 24-hour decline contrasted with gold's surge and oil price strength, historically precursors to conflict. Solana faced technical rejection after failing to hold above its 200-day exponential moving average, with key support at $149.68 aligning with a weekly order block. Notable institutional flows include $900 million entering digital asset funds this week, CoinShares research head James Butterfill reported, suggesting renewed confidence. Crypto equities mirrored the pullback: MicroStrategy fell 1.04% to $387.11, Coinbase dropped 1.67% to $250.68, while spot BTC ETFs saw $164.6 million daily inflows. Near-term catalysts include Brazil's B3 exchange launching ETH and SOL futures on June 16 and $128 million in token unlocks from Starknet, Arbitrum and ZKsync next week.