Is there hope for Bitcoins revival amidst the decline of ETF enthusiasm
Heading into the first half of 2024, the trajectory of Bitcoin has left investors pondering its future following a peak in March. Below is a creatively rephrased version of the article:
**Table of Contents**
1. Fear and Greed Index Sees Sharp Decline
2. Prospects for Bitcoin ETFs
3. Outlook for Improvement
Since its record high in March, Bitcoin (BTC) has experienced a 13% decline, following significant quarterly gains of 67% and 57%. This drop has prompted speculation about broader implications for risk appetite amidst looming prospects of prolonged higher interest rates across financial markets.
Austin Reid, FalconX’s global head of revenue and business, views the current uncertainty in the crypto market as temporary. He suggests that a slowdown in demand for spot Bitcoin ETFs might alleviate some pressure.
Matthew O’Neill, co-director of research at Financial Technology Partners, attributes January’s euphoric market response to the approval of spot Bitcoin ETFs, followed by a natural correction post-rally. He notes a surge in interest from professional investors seeking institutional exposure to Bitcoin, suggesting that the current dip in BTC presents a strategic buying opportunity before an anticipated price rebound.
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**Fear and Greed Index Sees Sharp Decline**
On June 25, the crypto market’s Fear and Greed Index dropped to 30 points, marking its lowest level since September 2023.
*Source: Alternative.me*
This shift towards fear coincided with a general market downturn, as Bitcoin fell from $62,500 to $59,100. This decline was exacerbated by news of initial payouts to Mt. Gox creditors.
*Source: CoinMarketCap*
Blockchain analyst Willy Wu highlighted a “cascading long squeeze” in BTC, attributing its fall to a 53-day low to miner capitulation post the April Bitcoin halving. Wu believes miners began selling BTC to upgrade equipment, as older devices became unprofitable. He identifies $54,000 as a critical support level for BTC, warning that falling below it could trigger a bearish market phase.
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**Prospects for Bitcoin ETFs**
According to CoinShares, investors allocated approximately $2.6 billion to Bitcoin ETFs in the second quarter, up from $13 billion in the preceding three months. This reversal follows a period of net outflows, signaling renewed interest in spot Bitcoin ETFs by the end of June.
Despite market instability surrounding cryptocurrency investment products, CoinShares reports withdrawals exceeding $1 billion from the sector over the past fortnight. The resurgence in spot Bitcoin ETF inflows suggests a potential revival in investor interest and a new phase in cryptocurrency market dynamics.
Attention has shifted towards Ethereum ETFs, with Citi projecting significant inflows of between $3.8 billion and $4.5 billion upon their launch. This could potentially raise ETH prices by 23-28%, aiming for $4,417 by November this year.
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**Outlook for Improvement**
CryptoQuant analysts foresee positive movements in the cryptocurrency market during the third quarter of 2024. They anticipate a recovery once miners conclude their BTC sales.
CryptoQuant also notes that recent market declines were partly due to miners, whose profitability declined post-halving, compelling them to sell assets. This reduced miners’ activities, prompting sales of Bitcoin through over-the-counter markets to cover operational costs.
Former Goldman Sachs CEO Raoul Pal predicts substantial cryptocurrency growth in the fourth quarter of 2024, citing historical trends of risky assets like BTC rallying around U.S. presidential elections.
Thus, experts maintain a bullish outlook for Bitcoin’s medium-term trajectory, despite recent growth deceleration within a localized corrective phase.
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