Bitcoin and cryptocurrency investors have been grappling with downward pressure since Q2's onset, triggered by concerns over potential selling by Mt. Gox exchange creditors, who hold an approximately $8 billion cache of the leading digital asset (Chart 1). Additionally, the historical precedent of high central bank interest rates continues to influence investment decisions in high-risk assets.

Despite the acceleration of US stocks, the correlation between Bitcoin and the SPX index has hit its lowest since January 2022 (Chart 2), indicating the persistent risk associated with the cryptocurrency market. The digital currency market's momentum has notably declined following the diminished excitement from spot ETF approvals, with investment from small individuals failing to make a significant breakthrough.

Interestingly, the Active Supply data's quarterly percentage change rate has sharply decreased since its peak in late March (Chart 3), reflecting cautious sentiment or lack of interest from F0 investors. However, the bearish sentiment doesn't paint the full picture. On-chain metrics from long-term holders suggest they are not yet ready to distribute most of their holdings. If the 4-year cycle holds significant influence, the 2-3 year investor cohorts are still holding on, potentially for the cycle's last bullish waves (Chart 4).