As the second quarter draws to a close, crypto investors are pondering Bitcoin’s next move after its retreat from the all-time highs reached during the height of the exchange-traded funds (ETF) mania. Bitcoin has declined about 13% since March, a stark contrast to the impressive 67% and 57% surges seen in the previous two quarters. After hitting a record $73,798 on March 14, Bitcoin is closing the quarter at around $61,000.

This downturn raises questions about the future of momentum trades like Bitcoin, particularly as the prospect of higher-for-longer interest rates looms over financial markets. The pullback has led to concerns about a tougher outlook for risk appetite among investors.

Austin Reid, the global head of revenue and business at FalconX, noted that many market participants are grappling with macroeconomic uncertainties, which are being reflected in the crypto market and other asset classes. This short-term uncertainty is contributing to Bitcoin’s recent price fluctuations.

One of the clearest indicators of waning interest in Bitcoin is the slowing demand for US ETFs that hold Bitcoin, which were approved by the Securities and Exchange Commission in January. Data from CoinShares shows that investors poured about $2.6 billion into Bitcoin funds in the second quarter, compared to around $13 billion in the first three months of the year.

Matthew O’Neill, co-director of research at Financial Technology Partners, observed that the initial release of the ETFs generated a lot of euphoria, leading to a natural price correction after the rally. The ETFs attracted significant interest from professional investors seeking Bitcoin exposure through institutional means.

For those investors who have not yet bought into the ETFs, O’Neill suggests they might be waiting for the next upward move in Bitcoin’s price before making their entry. This cautious approach indicates that while there is still interest in Bitcoin, investors are becoming more strategic about their timing.

In summary, as the second quarter ends, Bitcoin’s decline from its all-time highs has left investors questioning its future trajectory. The cooling of the ETF mania and macroeconomic uncertainties are contributing to a more cautious market environment. However, the underlying interest in Bitcoin remains, with many investors poised to re-enter the market during the next price surge.