Crypto Assets market experiences a pullback in June, but the fundamentals remain stable

In June 2024, the Crypto Assets market experienced a pullback, mainly influenced by selling pressure from Bitcoin, leading to a decline in overall investor risk appetite. Nevertheless, market research institutions remain optimistic about the long-term prospects of this asset class.

In June, traditional assets performed unevenly as the market digested various newly emerging risk factors. Affected by these risks, certain sectors underperformed, such as U.S. homebuilders (due to signs of a cooling housing market), the Chinese stock market and some industrial metals (due to renewed weakness in the Chinese economy), and French stocks (due to potential government changes).

In contrast, global bonds, emerging market stocks excluding China, and the S&P 500 index have performed relatively well, while the Swiss franc—often seen as a barometer for rising international risks—has also performed well. Bitcoin and Ethereum have both fallen by about 10%, making them relatively weaker segments on a risk-adjusted basis.

![Grayscale Research Report: Bitcoin and crypto markets under pressure in June, but asset fundamentals remain unchanged](https://img-cdn.gateio.im/webp-social/moments-3908caf9b438f68bb5278c4947448802.webp01

Multiple factors of actual and expected selling pressure contributed to Bitcoin's decline this month, affecting other Crypto Assets as well. The main sources of new selling pressure include:

1. Mt Gox Legacy: The trustee of the Mt Gox bankruptcy estate announced that it will begin repaying Bitcoin and Bitcoin Cash from early July, with Bitcoin holdings valued at up to $8.9 billion.

2. German Government: A German government agency has begun liquidating Bitcoin seized in 2013, sending nearly 4,000 Bitcoin (approximately $220 million) to exchanges during June.

3. The U.S. government: Sent 3,940 bitcoins ($240 million) to a deposit account of a certain trading platform, which came from the wallet of a convicted drug dealer.

4. US spot Bitcoin ETP: In the second half of June, there was a net outflow of $581 million, after experiencing net inflows in May and early June.

In addition, Bitcoin miners continue to reduce their holdings, having sold about 1,560 Bitcoins (approximately $100 million) over the past 30 days. On the other hand, a publicly listed company purchased nearly 12,000 Bitcoins (worth $786 million) in mid-June, which may have supported the price of Bitcoin to some extent.

Although short-term capital flows have affected the price of Bitcoin, the fundamentals of the asset have not changed significantly. The market has priced in expectations that the Federal Reserve may further cut interest rates in the next two years to address the continued easing of inflation. Additionally, adoption metrics for certain smart contract platforms show sustained growth, with daily active users on major smart contract platforms increasing steadily in recent months.

![Grayscale Research Report: Bitcoin and Crypto Assets Market Under Pressure in June, but Asset Fundamentals Remain Unchanged])https://img-cdn.gateio.im/webp-social/moments-282a4e88857391f59717ee2ddef07ac0.webp(

The spot Ethereum ETP has also made progress in the US market. In late May, regulators approved applications from several issuers to list these products on US exchanges. These products are expected to start trading in the third quarter of 2024, which may bring significant net inflows, supporting the valuation of Ethereum and tokens within its ecosystem.

In June, most crypto assets saw a price decline, but Toncoin (TON) was a notable exception. As the third largest asset by market capitalization in the smart contract platform crypto asset sector, the TON blockchain is integrated with Telegram and has the potential to leverage its 900 million monthly active user base. Driven by its token incentive program and the increasingly popular Telegram games, daily active users on the network grew from an average of 27,000 in January to over 400,000 in June.

Despite the setbacks in the market in June, research institutions remain optimistic about the valuation prospects for the remainder of the year. The macro backdrop is generally favorable for Crypto Assets, with economic growth, potential interest rate cuts by the Federal Reserve, and a strong stock market all being supportive factors. Although a recession in the United States may put pressure on the crypto market, slow but positive growth remains the main expectation for the economy.

In addition, the approval of Ethereum ETP may allow more investors to understand the concepts of smart contracts and decentralized applications, thereby recognizing the potential of public blockchains in transforming digital commerce.

![Grayscale Research Report: Bitcoin and Crypto Assets Market Under Pressure in June, But Asset Fundamentals Remain Unchanged])https://img-cdn.gateio.im/webp-social/moments-1036c9ee4989f02d7386d652325e172a.webp(