The cryptocurrency market is facing significant losses following its second-largest weekly drop of 2024, driven by dwindling interest in Bitcoin exchange-traded funds (ETFs) and ongoing uncertainty about monetary policy.
On Monday, Bitcoin experienced its largest intraday drop since mid-April, plummeting by 8.1% to $58,528. This downturn has been intensified by consecutive weeks of net outflows from cryptocurrency exchange-traded products, with more than $210 million in bullish bets on crypto being liquidated in just 12 hours, as reported by Coinglass.
According to Bloomberg, the top 100 digital assets by market cap fell roughly 5% in the week ending Sunday, marking the sharpest weekly decline since April. Compounding the market’s volatility, the Mt. Gox rehabilitation trustee announced plans to commence repayments of Bitcoin and Bitcoin Cash starting in July, a move that has potentially spurred traders to take short positions in anticipation of increased market liquidity.
Market analysts, such as Stefan von Haenisch from OSL SG Pte, note that the crypto market is currently struggling to find buyers. This sentiment is echoed by David Lawant of FalconX, who highlighted the prevailing market conditions of low volatility and thin trading volumes, which become especially pronounced when price movements test the boundaries of recent ranges.
The broader cryptocurrency sector is showing signs of stress. For instance, Ether and Solana have seen their longest stretches of weekly losses since last year and 2022, respectively. This comes even as the first U.S. ETFs that will directly invest in Ether are being prepared for launch, and despite Solana recently being favored by numerous digital-asset hedge funds.
Bitcoin reached a high of $73,798 in March but has since underperformed compared to traditional investments such as stocks, bonds, and gold. The 200-day moving average, now around $57,500, is being closely watched as a potential support level for Bitcoin’s price, according to Tony Sycamore of IG Australia Pty.
Adding to the bearish outlook, Caroline Mauron of Orbit Markets commented on the difficulty the market faces in absorbing large sell orders. Data from CoinShares International Ltd. further illustrates the downturn, with digital asset products experiencing $584 million in outflows for the week ending June 21, predominantly from Bitcoin investment products which saw about $630 million leave the market following a similar outflow the previous week.
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