Cryptocurrency market faces losses as Bitcoin ETF demand cools and monetary policy uncertainty grows

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25th June 2024 – (New York) The crypto market has experienced significant losses following its second-worst weekly decline of 2024, reflecting a decline in demand for Bitcoin exchange-traded funds (ETFs) and increased uncertainty surrounding monetary policy. On Monday, Bitcoin plummeted by as much as 8.1% to $58,528, marking the largest intraday decline since 13th April. This leading cryptocurrency has been impacted by two weeks of outflows from exchange-traded products holding Bitcoin. Tracker Coinglass reported that over $210 million worth of bullish bets in the crypto market were liquidated in the past 12 hours.

Bloomberg’s data reveals that the top 100 digital assets experienced a 5% decline over the seven days leading up to Sunday, marking the steepest slide since April. Concerns over increased selling pressure have escalated with the recent announcement by the rehabilitation trustee of Mt. Gox, the Japanese crypto exchange that suffered a major hack over a decade ago, stating that repayments of Bitcoin and Bitcoin Cash will commence in July.

Market participants are positioning themselves short in response to the Mt. Gox announcement, contributing to the struggle faced by crypto markets in attracting bids. The Federal Reserve’s limited ability to quickly reduce interest rates from a two-decade high has added to the doubts surrounding the crypto market. Some analysts view the retreat in digital assets as a warning sign for overall risk appetite.

The current state of the crypto market is characterized by low volatility, soft volumes, and imbalanced order books when prices approach the edges of their range, according to David Lawant, research head at FalconX. Notably, Ether and Solana have experienced the longest run of weekly declines since last year and 2022, respectively.

Despite the upcoming launch of the first US ETFs directly investing in Ether, the second-ranked cryptocurrency, and Solana’s recent popularity among digital-asset hedge funds, both assets have faced significant drops. Bitcoin, which reached a record high of $73,798 in March, is now trailing behind traditional investments such as stocks, bonds, and gold in the current quarter. Market analysts are closely monitoring the 200-day moving average at around $57,500 as a potential support zone for the price.

Bitcoin investment products have witnessed approximately $600 million in outflows for two consecutive weeks, marking the highest outflow over a two-week period since the approval of ETFs holding the largest cryptocurrency by the US in January. CoinShares International Ltd. data indicates that digital asset products collectively experienced $584 million in outflows in the week ending June 21, with Bitcoin products accounting for the majority of the outflows, totalling $630 million in the wake of a previous $600 million outflow the week before.