Story
Bitcoin Reclaims $60,000 After Steep Quarterly Loss Amid ETF Outflows
Summary
The digital currency saw a relief rally, but the move comes after a 14% quarterly decline and faces significant headwinds from hawkish central bank policy and record outflows from spot exchange-traded funds.
Bitcoin rose on Wednesday, climbing back above the key $60,000 threshold in a partial recovery from recent losses. The rally follows a difficult period for the asset, which concluded the most recent quarter with a 14% decline amid persistent concerns over U.S. interest rate policy and significant institutional selling.
By late Wednesday trading, Bitcoin was up approximately 3.7% to trade around $60,807, according to Investing.com data. The move provided some respite for investors after the cryptocurrency briefly touched a 22-month low near $57,800 earlier in the session. Despite the daily gain, Bitcoin remains down 32% year-to-date and more than 50% below its all-time high.
Persistent Headwinds Pressure Market
The recent weakness in the crypto market is largely attributed to a hawkish stance from the U.S. Federal Reserve. Following its June meeting, market expectations have solidified around the possibility of at least one interest rate hike this year, increasing the opportunity cost of holding non-yielding assets like Bitcoin.
Adding to the pressure are substantial outflows from U.S. spot Bitcoin exchange-traded funds (ETFs). According to data from SoSoValue, these funds experienced their largest-ever monthly outflows in June.
- June Outflows: Investors pulled a record $4.5 billion from the products.
- Consecutive Withdrawals: The funds recorded nine straight days of outflows through June 30.
- Asset Decline: Total net assets in U.S. spot Bitcoin ETFs have fallen to approximately $70.9 billion, down from a peak of over $110 billion earlier this year.
AdInvestor appetite has also been dampened by a rotation into high-performing artificial intelligence-related stocks, which some market participants view as having clearer fundamental drivers.
Analyst Outlook Dims
Reflecting the challenging environment, analysts at Citi recently slashed their 12-month price targets for both Bitcoin and Ether. The bank cited weakening investor demand, negative ETF flows, and stalled progress on U.S. crypto legislation as key headwinds.
Citi lowered its Bitcoin target to $82,000 from a previous $112,000 and reduced its Ether forecast to $2,240 from $3,175. In a bear-case scenario involving recessionary conditions, the bank sees Bitcoin potentially falling to $53,000. Broader cryptocurrency markets followed Bitcoin's upward move on Wednesday, with major altcoins like Ether, Solana, and Cardano also posting gains.