Bitcoin, the pioneering cryptocurrency, has experienced a notable decline of approximately 13% since March, marking a stark contrast to the substantial surges of 67% and 57% observed in the preceding two quarters. Initially reaching a record high of $73,798 on March 14, Bitcoin is now concluding the quarter trading around $61,000.
This downturn has sparked discussions regarding the sustainability of momentum trades such as Bitcoin, amid looming concerns over higher interest rates that could dampen risk appetite across financial markets.
“A lot of market participants are grappling with macroeconomic uncertainties,” noted Austin Reid, global head of revenue and business at FalconX. “Short-term uncertainty is evident in the crypto market, echoing trends seen in other asset classes.”
A telling indicator of diminishing interest in Bitcoin is the slowdown in demand for U.S.-based ETFs authorized to hold the cryptocurrency, approved by the Securities and Exchange Commission (SEC) in January.
According to data compiled by CoinShares, investors allocated approximately $2.6 billion to Bitcoin funds in the second quarter, a notable decline from the roughly $13 billion invested in the first quarter of the year.
“The launch of ETFs generated considerable excitement, followed by a natural price correction post-rally,” explained Matthew O’Neill, co-director of research at Financial Technology Partners. “These ETFs attracted substantial interest from institutional investors seeking exposure to Bitcoin through regulated channels.”
O’Neill suggested that investors who have not yet entered the ETF market may be awaiting the next uptick in Bitcoin prices before making their move.
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