Bitcoins Rapid Ascent Fast Climbs Slow Rides Down

The market continues to fluctuate in the $60,000-70,000 range as it prepares to reach historical highs in advance.
BTC continues its short-term downward trend, dropping below $61,000 on June 24th. I previously predicted that the market was entering a short-term clearing phase of weak balance, with Bitcoin miners being the first to clear out. As prices fell, more and more miners sold all of their daily production (with a maximum supply of 450 coins/day) and sold their solid stock.
Unfortunately, clearing often comes with a certain degree of panic. The short-term investor cost line, which has received strong support for over a year (rising to $64,000), has not provided an effective resistance. After falling below $61,000, the distance to the biggest adjustment since BTC reached its historical high, at $56,500, is only 8%.
During this time, news of the German government clearing confiscated BTC and repaying investors’ BTC from Mt. Gox is just a bit of negative assistance in a weakening market. More importantly, the Federal Reserve has continued its hawkish rhetoric, further strengthening expectations for a rate cut this year. The strong Nasdaq index has also seen a correction, with Nvidia falling by more than 5% in a single day.
In a fragile market, every external factor is important. But it can be said with certainty that the core reason is that the entire market is still preparing to reach a historical high in advance. Historically, there have been long periods of adjustment before and after BTC’s three halvings, with the last adjustment after the halving lasting over 6 months. This rapid rise is no exception. The good news is that the market has once again provided investors with a window of opportunity to board calmly.
Supply and demand structure
The stablecoin inflow last week exceeded $708 million, more than double the amount from the previous week. USDT and USDC saw inflows of $375 million and $333 million, respectively. However, it’s worth noting that stablecoin stocks on exchanges are actually decreasing.
In terms of ETFs, there were outflows for all four trading days last week, with daily outflows exceeding $100 million and total outflows exceeding $500 million. This selling is one of the reasons for the price decline. One point that needs to be corrected is that institutional holdings in ETFs account for only about 22%, and the main players are hedge funds. While they buy spot ETFs, they often hedge by opening short positions on the CME, which does not directly contribute to the market’s long-term rise. Meanwhile, more than 75% of the holdings are held by retail investors, who exhibit typical “buy high, sell low” behavior.
In summary, the upward momentum brought by US ETFs is currently in a state of stagnation and will need a sufficient amount of time to be absorbed.
CME contracts still have a relatively high open interest of about $10 billion, down more than 10% from the peak. However, trading volume has fallen to around $1.7 billion, close to the low point of $1.6 billion in early May.
Is this a turning point?
Most retail investors have lost confidence, but little do they know that the market is quietly restructuring for a new round of trends.
The proportion of Bitcoin’s market value to that of altcoins has reached the suppression line on the monthly chart. In the previous bull market, when this line was reached, there was a significant trend in altcoins. Therefore, the probability of a trend occurring from July to November is very high, and the current price range of high-quality altcoins can be seen as the bottom range for the future.
Investment in Ethereum ETFs has not materialized, but confidence remains. The worst-case scenario: if the market continues to decline indefinitely in the second half of this year and the first quarter of next year, it means that the main players no longer want to let retail investors drink from the soup, and this is beyond words. Let the big players accompany their Bitcoin and Ethereum forever.
However, I always believe that a sustained downturn is often the birth of an opportunity, and the emotions of retail investors and the state of the market are not deceiving. Reversals often occur at such times.
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