Bitcoins Rapid Surge Spells Prolonged Volatility Ahead

CoinWorld.com reports:
The market continues to oscillate within the $60,000-$70,000 range, gearing up for an early push towards historical highs.
BTC has maintained a downward trend, dropping below $61,000 on June 24th. Earlier predictions indicated a short-term phase of weak equilibrium with miners being the first to liquidate. As prices corrected, more miners sold their daily outputs (up to a maximum of 450 coins/day) and even their firm inventories.
Unfortunately, such liquidations often trigger some degree of panic selling. Despite cost lines for short-term investors receiving strong support over the past year (rising to $64,000), they have not effectively resisted. Following the drop below $61,000, the largest adjustment since BTC’s historical high positions it just 8% away from $56,500.
During this period, news from the German government clearing confiscated BTC and Mt. Gox reimbursing investors with BTC only added to the market’s fragility. More significantly, the Federal Reserve has maintained its hawkish rhetoric, further reinforcing expectations for one rate cut this year. The robust NASDAQ index has also seen corrections, with NVIDIA experiencing a single-day drop of over 5%.
In this fragile market, every external factor carries weight. However, it’s certain that the core reason lies in the market’s attempt to settle debts ahead of reaching historical highs. Historically, BTC has experienced prolonged adjustment periods around its three halving events, with the last halving resulting in over six months of correction. This rapid surge is no exception. The good news is that the market has once again provided investors with an opportune window to enter.
Supply-Demand Structure
Last week saw a $708 million inflow into stablecoins, more than double the previous week’s figure. USDT and USDC led the inflows, totaling $375 million and $333 million respectively. It’s worth noting, however, that stablecoin balances on exchanges have actually decreased.
ETFs recorded outflows throughout the week, exceeding $1 billion on single days and totaling over $500 million overall. Institutional holdings in ETFs stand at approximately 22%, predominantly held by hedge funds. While purchasing spot ETFs, they often simultaneously hedge by shorting on CME, contributing little direct impetus to market long-term growth. Meanwhile, over 75% of holdings are by retail investors, typifying a “chasing highs and selling lows” effect.
In summary, the upward momentum from US ETFs is currently lackluster, requiring a significant period to digest.
Regarding CME contracts, open interest remains relatively high at around $10 billion, down over 10% from its peak, with trading volumes falling to approximately $1.7 billion, nearing the early May low of $1.6 billion.
Is this a turning point?
Most retail investors have lost confidence, unaware that the market is quietly restructuring for a new round of gains.
BTC’s market dominance over altcoins has approached resistance levels on the monthly chart, historically marking significant rallies for altcoins from the last bull market. Therefore, the probability of a market rally from July to November is very high. Current prices of quality altcoins are within the bottom range when viewed into the future.
ETF funds for Ethereum have yet to enter, indicating lingering confidence. Worst-case scenario: if the market continues its downward trend indefinitely into the latter half of this year and the first quarter of next year, it suggests that major players are unwilling to let retail investors partake. In such a scenario, let the whales keep their Bitcoin and Ethereum forever.
However, I always believe that prolonged downturns often birth opportunities, and sentiment from retail investors and market conditions do not deceive. Reversals often occur at such times.
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