Rush to Buy Bitcoin as Cryptocurrency Market Falls Deeply

Since mid-May, Bitcoin has been hovering around $29,000-$31,000. Most indicators suggest that Bitcoin is approaching the middle or end of a “bear market” — a prolonged period of falling prices.

Other cryptocurrencies are also in a gloomy period. Ethereum has seen many declines over the past two months. Its market price is currently around $1,700-1,900 per unit, only half of what it was at the beginning of April. Binance Coin, after bottoming out at under $230 per unit, has recently recovered but is only around $275-310, losing about 20% of its market value compared to the beginning of May.

Amid a deep market downturn, digital asset investors see Bitcoin - the oldest cryptocurrency with the largest market capitalization - as a safe haven because it is less risky than most other coins.

Bitcoin now accounts for more than 47% of the total cryptocurrency market capitalization, according to data from TradingView. Bitcoin funds also recorded a second consecutive week of higher inflows than other digital asset funds. The latest report from CoinShares shows that Bitcoin-focused funds took in $125.9 million in the week ending June 3, up to $506 million year-to-date.

Overall, cryptocurrency funds have seen about $100 million in inflows. Short-term Bitcoin funds — which are primarily looking to speculate on falling cryptocurrency prices — have also seen $1.3 million in inflows. Yahoo Finance says the pace of Bitcoin purchases is at its highest in nearly a year.

According to CoinDesk, the new money allocated to Bitcoin funds is enough to offset losses in non-Bitcoin funds or alternative cryptocurrencies (altcoins). James Butterfill - head of research at CoinShares - commented that the sign shows that "investors are flocking to the relative safety of Bitcoin".

Some investors have cut back on risky assets, including cryptocurrencies, as financial markets have been rocked by persistently high inflation, rising interest rates by central banks around the world and growing recession fears.

Ethereum funds continued their negative streak, marking nine consecutive weeks of no inflows. Investors withdrew $32 million from the second-largest cryptocurrency fund. This brings the total withdrawals year-to-date to $357 million....

Geographically, the change in market flows came mainly from the Americas, with $88 million in inflows last week. Meanwhile, funds listed in Europe recorded only $11 million in investment capital during the same period. Created during the 2007-2009 financial crisis, Bitcoin was initially envisioned as a currency outside of government control. Over time and changes in the financial system, Bitcoin's role has gradually changed. Today, many people often refer to it as "digital gold".

Volatility is one of the main characteristics of the world's largest cryptocurrency, but data from Coin Metrics shows that Bitcoin's volatility has decreased over time. Since December last year, the cryptocurrency has slightly outperformed the market.stock, especially high-growth tech stocks. After the sell-off in early May, which included the collapse of TerraUSD, Bitcoin’s correlation with the S&P 500 has dropped sharply, although it remains high.

Tom Dunleavy, senior research analyst at Messari, said that Bitcoin remains “heavily influenced by the macroeconomic environment,” largely due to the current tightening monetary cycle. This relationship has led traders and investors to focus on US economic events when considering trading digital assets. As the US and other governments seek to institutionalize the cryptocurrency market and increase control, Bank of America CEO Brian T. Moniyhan said that large, well-regulated financial institutions may change their minds and become more open to investing in it.

After noting the recent increase in investor demand and trading volume, Fundstrat technical analyst Mark Newton said that Bitcoin may have found a short-term bottom, although tightening monetary policy will make investors cautious. Accordingly, the market price of the world's largest cryptocurrency could reach $ 37,000-39,700 this month.

But with recent job cuts at Coinbase, Gemini and Robinhood — major cryptocurrency trading units — the digital asset industry appears to be preparing for a dreaded “winter.” Many exchanges plan to cut around 10% of their workforce during a prolonged bear market.

According to VnExpress