Bitcoin faced significant selling pressure on Wednesday, dropping 1.77% over 24 hours to $107,534.98 as escalating Middle East tensions triggered a flight to traditional safe havens like gold and the Swiss franc. This geopolitical risk, highlighted by U.S. evacuations from the region and potential Israeli military action against Iran, overshadowed positive U.S. inflation data, where core inflation held steady at 2.8% for the previous month. Analysts, including Boris Alergant, head of institutional partnerships at Babylon, noted that Bitcoin continues to trade as a risk-on asset, with short-term dips contrasting sharply with long-term optimism for a $200,000 price target by year-end, driven by institutional adoption and favorable macro tailwinds.

Macroeconomic Catalysts and Market Sentiment

Favorable inflation trends bolstered risk asset appeal, with consumer prices rising less than forecast, increasing the likelihood of Federal Reserve rate cuts. Traders now expect two cuts starting in September, according to the CME FedWatch tool, which could enhance cryptocurrency demand. However, geopolitical instability reversed gains, causing the U.S. dollar index (DXY) to fall 0.57% to 98.07 and gold futures to surge 1.26% to $3,385.80. This dual dynamic pushed the broader crypto market index down 2.52%, with ether (ETH) declining 0.8% to $2,753.40 and solana (SOL) dropping 1.066% to $143.91. James Butterfill, head of research at CoinShares, emphasized $900 million in digital asset fund inflows this week, signaling rebounding confidence amid near all-time high prices and loose global money supply, but warned that unexpected conflict escalation could swiftly reverse these gains.

Derivatives and Trading Opportunities

Derivatives markets revealed strong bullish positioning despite the pullback, with Bitcoin options open interest on Deribit hitting $36.7 billion—a monthly high—and call options clustered at the $140,000 strike for the June 27 expiry, reflecting a put/call ratio of 0.60. Ether options open interest also reached a yearly peak of $6.87 billion, with a put/call ratio of 0.45 indicating heavy call concentration at $3,000. Funding rates stabilized, with Deribit at 12.84% APR and Binance at 8.12% annualized, suggesting elevated but sustainable long exposure. For altcoins, Solana's technical setup showed weakness, failing to breach the 200-day exponential moving average and finding support at the 100-day EMA near $149.68; a break below this level could target $142.37, aligning with weekly demand zones. Upcoming token unlocks add volatility risks, such as ZKsync's (ZK) $41.78 million unlock on June 17, potentially pressuring prices, while SEC openness to altcoin ETFs may fuel an "altcoin summer" for assets like Solana.

Key Support and Resistance Levels

Traders should monitor critical levels for strategic entries: Bitcoin's immediate support lies at $106,803.73 (24-hour low) with resistance at $108,209.12 (24-hour high), while ether faces resistance at $2,515.00 and support at $2,391.53. Solana's Monday low of $149.68 serves as a pivotal downside target, and broader market indicators like the ether to bitcoin ratio rising 0.43% to 0.02562 hint at altcoin strength. With events like the U.S. producer price index release on June 12 and the G7 Summit from June 15-17, catalysts abound; positioning near support with stop-losses could capitalize on potential rebounds toward $200,000, especially if inflation data surprises positively and tensions ease.