Bitcoin and cryptocurrency investors have continued to face downward pressure since the beginning of Q2, including concerns about potential selling by creditors of the Mt. Gox exchange, which has an approximately $8 billion hoard of the most prominent digital asset in the market (Chart 1).

In addition, the historical lesson of high central bank interest rates continues to overshadow investment decisions in high-risk assets. Although US stocks continue to accelerate, the correlation between Bitcoin and SPX's index has dropped to its lowest level since January 2022 (Chart 2), which shows that the lingering riskiness of the cryptocurrency market is still quite a painful issue.

In particular, the momentum of the digital currency market has decreased sharply after the excitement from spot ETF approvals has reduced, and the level of investment from small individuals has not shown a breakthrough, which is the primary energy source for previous bull runs.

The evidence is that the percentage change rate of Active Supply data by quarter has decreased sharply since the peak in late March (Chart 3). The percentage decrease shows the cautious sentiment and (or) lack of interest from F0 investors. The appearance of spot ETFs is mainly aimed at investors in the US, and these investors, although strong, only account for a part of the global market. No one knows how many are new waves or are still just veterans trying to accumulate more assets with both right and left hands. (CEX, DEX + ETFs).

However, the bearish sentiment doesn't tell the whole story; the on-chain metrics of long-term holders are a sign that they are not yet content to distribute most of their holdings; if the 4-year cycle is a significant effect, then the 2-3 year investor cohorts are still holding on, I predict that it may be for the last bullish waves of this cycle. (Chart 4)

Written by BinhDang