The past week in the cryptocurrency world has been turbulent, with major value coins experiencing a prolonged bearish trend. The continuous liquidation of CRV and the ZK airdrop have left people feeling anxious. Today, as Bitcoin drops below $65,000, the cryptocurrency market once again faces a “519” scenario.
Even Ethereum, which had ETF expectations, is not spared from the downturn. According to OKX market data, Ethereum has fallen below $3,400 with a 24-hour decline of 6.23%. SOL, relying on meme narratives, struggles to regain its peak amidst the market downturn, dropping below $140 with a 24-hour decline of 7.23%.
Following this, altcoins followed suit with a widespread decline in the market. WLD, a major target of AI hype, fell below $3 with a 24-hour decline of 16.3%. According to BlockBeats incomplete statistics, most altcoins have seen declines of over 20%, such as IO with a 24-hour decline of 25.85%; USTC with a 24-hour decline of 24.27%; KNC with a 24-hour decline of 23.39%; BB with a 24-hour decline of 23%; and NOT with a 24-hour decline of 22.4%.
Coinglass data shows that in the past 24 hours, there have been liquidations totaling $318 million, with long positions liquidated at $270 million and short positions at $48.106 million. The total cryptocurrency market capitalization has also declined, dropping to $2.45 trillion according to CoinGecko, with a 24-hour decline of 4.4%.
Why the continued decline? The market this year has been unpredictable, with meme disruptions affecting market sentiment and a mixed market trend causing confusion even among analysts. However, the main reason for this recent decline remains the outflow of Bitcoin ETFs.
Starting last week, Bitcoin ETFs have been experiencing net outflows. According to Farside Investors data, as of June 15th, US Bitcoin spot ETFs have seen a cumulative net outflow of $580.6 million.
Additionally, Lookonchain monitoring shows that yesterday, 9 US Bitcoin spot ETFs reduced their holdings by 3,169 BTC, with Fidelity reducing holdings by 1,224 BTC (worth -$80.34 million), currently holding 171,529 BTC ($11.25 billion). Grayscale reduced holdings by 936 BTC (worth -$61.40 million), currently holding 281,212 BTC ($18.45 billion).
If ETFs were once the treasure trove of this bull market, the funds they attracted mostly remained in the Bitcoin ecosystem, while the crypto world, led by Ethereum, still relies on value coins and memes. This market sees value coins struggling to compete against leaders like PEPE, falling short to rising stars like WIF, and celebrity coins like MOTHER even breaching Ethereum’s defenses.
The overall crypto market seems to lack new money influx, with stablecoin market capitalization remaining around $160 billion. According to coinmarketcap data, the market capitalization was at $162.6 billion at the time of writing, with a 24-hour decline of 0.05%.
Not only is there a lack of new money, but funds also seem to be flowing into other tech assets, with NVIDIA’s stock price hitting new highs and surpassing a $3 trillion market cap on June 5th, overtaking Apple ($3 trillion). The market value increased by over $140 billion in just one Wednesday, with 4 out of the past 9 trading days seeing market value increases exceeding $100 billion.
With Ethereum performing poorly, will memes continue to grow?
The first “519” this year occurred when Bitcoin broke through $69,000 to set a new all-time high, only to drop below $60,000 overnight, resulting in over $10 billion in liquidations and a Bitcoin volatility index nearing a year-long high of 78.81. However, the Bitcoin ETF’s daily trading volume reached a record $10 billion, suggesting that the pullback was a normal post-all-time high correction.
The second occurrence happened two months ago during the Bitcoin halving. While the network saw $9.35 billion in liquidations, Bitcoin’s retracement wasn’t severe, only dropping by less than 10%. However, altcoins led by ETH faced a near-bloodbath in the crypto market.
Despite multiple widespread market declines, the previous retracements did not affect the overall bullish market sentiment. However, this time, analysts seem to be wavering.
On June 14th, CoinDesk reported that despite strong US stocks and favorable US cryptocurrency policies, traders expect a deeper Bitcoin (BTC) price correction in the coming weeks due to miner selling activity and widespread profit-taking. Alex Kuptsikevich, senior market analyst at FxPro, stated, “The new strength of the dollar and demand for stocks are emerging. The demand for risk assets is gradually decreasing, leading to a trend of declining highs in Bitcoin trading.”
“Bitcoin continues to test the strength of the 50-day moving average but cannot find enough reasons to further decline. Testing lows persistently allows the bears to succeed quickly, with the next target being $60,000,” he added.
Some observers suggest that miners, who provide significant computational resources to maintain the Bitcoin network, may be one of the selling groups. Analysts added, “The increasing net outflow of Bitcoin by miners may not necessarily pressure the price of Bitcoin, but the price often stalls.”
Furthermore, expectations for Ethereum (ETH) also seem insufficient to make analysts bullish on the asset.
On June 12th, a post by Matrixport indicated that since the merger of PoW and PoS chains in September 2022, the ETH/BTC exchange rate has been in a clear downtrend. Although Ethereum occasionally briefly surpasses Bitcoin, this situation has not been sustained. As the exchange rate nears the top of the downward channel, ETH may perform poorly once again.
As for the biggest hype of this cycle, meme coins, BitMEX founder Arthur Hayes remains optimistic. Hayes believes that a Dogecoin ETF may be introduced at the end of this cycle, citing the substantial growth rates of meme coins based on dogs over the years.
Raoul Pal, CEO and co-founder of Real Vision, also agrees with Hayes’ prediction that a Dogecoin ETF will appear at the end of the market cycle. He strongly supports a Dogecoin ETF and has discussed this possibility with Jan van Eck, CEO of investment management firm and spot Bitcoin ETF provider VanEck.
