CoinDesk Reports:
The Bitcoin frenzy appears to have cooled off. Since hitting a historic high of $73,000 in March, as of Monday, Bitcoin has seen a cumulative decline of about 14% from its peak, with a roughly 10% drop in the second quarter contrasting sharply with a 57% surge in the first quarter of the year.
Alongside Bitcoin’s decline, enthusiasm for Bitcoin ETFs has also waned. According to data from CoinShares, funds flowing into Bitcoin ETFs in the second quarter of this year amounted to only about $2.6 billion, compared to approximately $13 billion in the first quarter, marking an 80% decrease.
Adding to the downward trend, influential figure in the crypto space and PayPal co-founder Peter Thiel disclosed on the 30th that he has sold most of his Bitcoin holdings. Previously, Thiel’s venture capital firm, Founders Fund, had bought $100 million worth of Bitcoin in 2023 when prices were around $30,000. Now, Thiel has stated his diminishing interest in Bitcoin as a “cyberpunk, libertarian thing,” though he retains a small portion of his holdings. He believes Bitcoin may still have some upward potential in the future, but the timing of such rises remains uncertain, foreseeing a volatile and turbulent journey ahead.
With Bitcoin continuing to slide and key figures exiting, investors are left pondering whether the risk appetite for momentum trades like Bitcoin will become more severe in light of sustained high interest rates in financial markets. Austin Reid, Head of Global Business at FalconX, remarked, “Many in the market are voicing macro concerns, similar to what we’ve seen in other asset classes, reflecting short-term uncertainty in the cryptocurrency market.”
Meanwhile, Matthew O’Neill, Director of Research at Financial Technology Partners, holds a relatively optimistic view on Bitcoin’s future prospects, seeing pullbacks after major rallies as normal. O’Neill noted, “The launch of US Bitcoin ETFs earlier this year attracted substantial capital, particularly from professional investors looking to gain exposure through institutional channels, making ETFs the preferred choice.”
For investors still eyeing Bitcoin ETFs, O’Neill suggests they might be waiting for Bitcoin to regain upward momentum before entering the market.