Bitcoin has started June with a significant slump, as a core investment thesis that previously supported the market has collapsed, with liquidity persistently shifting towards other asset classes.
Under the pressure of this dual negative impact, the benchmark cryptocurrency has faced further downward pressure: investors are broadly reducing their risk exposure, with capital flowing heavily into markets that have clearer short-term catalysts and stronger upward momentum, such as the semiconductor sector and targets related to the SpaceX initial public offering. According to Coin Metrics data, Bitcoin has fallen 13% this week, marking its worst weekly performance since February.
This also aligns with a recurring pattern in crypto cycles: once mainstream speculative narratives recede, capital within the market tends to rotate out quickly. In the absence of new positive catalysts to support demand, Bitcoin becomes highly susceptible to capital flows, leading to sharp declines. Traders are currently reassessing what factors might drive the next bull market.
Spot ETFs Record Longest-Ever Streak of Net Outflows
Data from SoSoValue indicates that US spot Bitcoin ETFs experienced net redemptions for the 13th consecutive day on Wednesday, setting a new record for the longest outflow streak since the products launched. The corresponding total fund assets have shrunk from $107.8 billion on May 14th to $82.8 billion.
Citigroup analyst Alex Saunders noted in a research report that ETF fund flows are a core variable determining Bitcoin's price, explaining approximately 45% of its weekly price volatility. They also serve as the most effective indicator for observing institutional entry willingness and market demand.
Diminished Expectations for Regulatory Bill Passage Dampen Bullish Thesis
He added that the probability of the US CLARITY Digital Asset Market Clarity Act being passed, which was a key positive catalyst previously attracting capital inflows, is continuously decreasing. Influenced by adjustments to Congressional legislative priorities and intensifying disagreements among lawmakers over key provisions of the bill, the likelihood of its near-term enactment has significantly declined.
Saunders stated that until there are positive developments on the regulatory front or the market no longer fears the monetary debasement trade demand stemming from US fiscal deterioration, sentiment in the crypto market is likely to remain subdued. The divergence in performance between Bitcoin and US stock markets is expected to widen further.
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