Crypto Market Faces Second-Worst Weekly Decline of 2024 amid Cooling Demand and Policy Uncertainty

The crypto market is facing a turbulent time as losses continue to mount following its second-worst weekly decline of 2024. Bitcoin, the leading token by market value, saw a significant drop of 8.1% to $58,528 on Monday, marking the biggest intraday decline since April 13. This decline is attributed to cooling demand for Bitcoin exchange-traded funds and uncertainty over monetary policy.

Over the past two weeks, there have been outflows from exchange-traded products holding the cryptocurrency, totaling more than $210 million. Additionally, more than $210 million worth of bullish bets in crypto were liquidated in the past 12 hours, adding to the selling pressure in the market.

The rehabilitation trustee of Mt. Gox, the Japanese crypto exchange that was hacked over a decade ago, announced that it would start repayments of Bitcoin and Bitcoin Cash in July. This news has further fueled fears of increased selling pressure in the market.

Analysts are also keeping a close eye on the Federal Reserve’s scope to cut interest rates quickly from a two-decade high, which is adding to the uncertainty in the market. The current crypto market dynamic is characterized by low volatility and soft volumes, with orderbooks becoming unbalanced as prices move to the edges of their range.

Despite the upcoming launch of the first US ETFs investing directly in Ether and the popularity of Solana among digital-asset hedge funds, both cryptocurrencies have seen significant declines in recent weeks. Bitcoin, which hit a record high in March, is now trailing traditional investments such as stocks, bonds, and gold this quarter.

Overall, digital asset products saw $584 million in outflows in the week ended June 21, with Bitcoin products accounting for the majority of the outflows. The market is facing a bearish mood as it struggles to digest large sell orders, indicating a challenging period ahead for crypto investors.