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While traditional asset classes like equities, commodities, and bonds have given strong returns, BTC price has corrected by 5% in the second quarter.
After hitting an all-time high of $74,000 earlier in the first quarter of 2024, Bitcoin price has delivered a subdued performance undergoing a strong price consolidation. As of press time, Bitcoin is trading 0.75% down at $66,994 with a market cap of $1.320 billion.
As per the Bloomberg report, stocks and bonds have delivered better returns than Bitcoin, so far this quarter. While traditional financial assets like equities, commodities and fixed-income instruments are all in the positive territory, the BTC price is trading 5% down in the second quarter.
During the first quarter massive inflows in the spot Bitcoin ETF ignited the animal spirits among the investors. Although the inflows have continued since then, they remain a bit subdued. On the other hand, the uncertainty around the Fed rate cuts has dampened the prospect of any major rally in Bitcoin.
“In other words, not all the ETF inflows represent new money coming into the market, and only new money will move the price,” wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter.
Demand for Bitcoin Products Remain a Bit Subdued
JPMorgan Chase & Co strategists, led by Nikolaos Panigirtzoglou, examined the demand for Bitcoin products, which have attracted approximately $15 billion in net inflows so far, according to Bloomberg data.
The strategists noted a significant shift from digital wallets on exchanges to the new spot-Bitcoin ETFs. Excluding this shift, they estimate this year’s net flow into crypto, encompassing ETFs, venture capital fundraising, and CME Group futures activity, to be around $12 billion.
This is still lower than the $45 billion inflows during the crypto bull rally of 2021, as well as the $40 billion flows during 2022. JPMorgan strategists stated that they are skeptical whether the current pace of inflows will continue for the rest of 2024.
The current selling pressure on Bitcoin comes largely due to the Bitcoin miner capitulation. The miners have been selling their BTC aggressively to cope with the rising Bitcoin production costs after the recent halving in April. As per sources, the cost of producing one Bitcoin has shot up to $77,000.
The fact that Bitcoin is struggling to breakout is beneficial for the overall cycle
Bitcoin has never broken out this early in the Post-Halving period
If it did, the cycle would be accelerated to such a point that the Bull Market would simply be shorter than usual
This… pic.twitter.com/cQHKWy7hPE
— Rekt Capital (@rektcapital) June 13, 2024
Popular Bitcoin analyst Rekt Capital stated that the current Bitcoin price consolidation is rather beneficial to all which will ensure a sustained bull run in the later stage. He added that historically, Bitcoin has never given a breakout this early after the halving period.
