Demand for bitcoin exchange-traded funds (ETFs) has cooled and uncertainty over monetary policy has led to mounting losses in the cryptocurrency market following its second largest weekly decline since 2024.

Bitcoin fell 8.1% to $58,528 on Monday, its biggest intraday drop since April 13. The price of bitcoin was hit as exchanges holding the cryptocurrency saw fund outflows for two consecutive weeks.

According to data compiled by Coinglass, over $210 million worth of bullish cryptocurrency bets were liquidated in the past twelve hours. Bloomberg data shows that the top 100 digital assets fell about 5% in the seven days leading up to last Sunday, the biggest drop since April.

The trustee of Mt. Gox, a Japanese cryptocurrency exchange that was hacked over a decade ago, announced that it will begin repaying bitcoin and bitcoin cash starting in July, fueling fears of increased selling pressure.

"With the announcement by Mt Gox, it seems that some market participants have started to short," said Stefan von Haenisch, head of trading at OSL SG Pte. "The cryptocurrency market is currently struggling to catch bid."

The rift in the cryptocurrency world comes as doubts mount over whether the US Federal Reserve can swiftly cut interest rates from a two-decade high. For some analysts, the decline in digital assets is a warning signal for broader risk appetite.

"The current dynamic of the cryptocurrency market is low volatility and low liquidity, with the order book losing balance as prices start moving towards the range edges," wrote David Lawant, research director at FalconX in a report.

The declines in certain corners were particularly pronounced: Ethereum and Solana fell to their longest since last year and 2022, respectively. This is happening as fund firms prepare to launch the first US ETFs that directly invest in ether. Meanwhile, Solana has recently been favored by various digital asset hedge funds.

Bitcoin set a record of $73,798 in March, but has lagged behind traditional investments such as stocks, bonds and gold this quarter. IG Australia Pty market analyst Tony Sycamore said the 200-day moving average currently around $57,500 is the possible support area for bitcoin prices.

"Bearish sentiment seems to be forming. The market is having a hard time digesting any large sell orders," said Caroline Mauron, co-founder of Orbit Markets, a digital asset derivatives liquidity provider.

Bitcoin investment products saw outflows of about $600 million for two consecutive weeks, the largest outflow in two weeks since the approval of the largest cryptocurrency ETF in the US in January.

Data from CoinShares International Ltd. shows that digital asset products experienced an overall outflow of $584 million in the week ending June 21. Bitcoin products accounted for the majority, with outflows of $600 million after outflows of $630 million the previous week.

Nearly $9 billion in potential selling pressure is coming.

Bitcoin suddenly faces potential selling pressure of nearly $9 billion, with prices falling $5,000 in the past 24 hours to a low of $58,300. The issue is related to early cryptocurrency exchange Mt. Gox, which was hacked starting in 2011, resulting in more than 600,000 bitcoin stolen and bankruptcy in 2014. The team responsible for managing the remaining funds of Mt. Gox announced on the 24th that it will start repaying cryptocurrency to creditors who lost assets over a decade ago, in the form of bitcoin and bitcoin cash payments.

According to data from Arkham Intelligence, as of Monday, the exchange held about 141,687 bitcoins worth about $8.7 billion. Investors are concerned that Mt. Gox creditors may choose to sell the bitcoins they receive, putting pressure on the cryptocurrency as its current trading price is much higher than it was more than a decade ago.

It is worth noting that some investors of Mt.Gox have received cash payments for stolen assets earlier this year, but repayment of Bitcoin and Bitcoin Cash will begin next month.

Bitcoin sellers are considering the impact of more than 140,000 bitcoins entering the market in less than a month. Alex Thorn, research director of Galaxy, said: "We believe that the amount of Bitcoin repayment will be less than people imagine, and the selling pressure it causes will be smaller than expected by the market." Thorn said his research shows that 75% of creditors will receive early payments in July, which means that about 95,000 bitcoins will be distributed. Thorn believes that 65,000 of them will belong to individual creditors, but he thinks these people may be more "diamond-handed" (investors who firmly hold and don’t sell) than most people expect.

He said one reason for this is that they have resisted for years the convincing positive offers from the compensation fund, not to mention the capital gains tax involved given the rise of Bitcoin by 140 times since bankruptcy.

Editor/Emily