The crypto market experienced a significant correction in early June. Foreign media quoted Avinash Shekhar, co-founder and CEO of the Indian crypto futures platform Pi42, as saying that this was more of a momentum reset than a breakdown in the fundamentals of the digital asset industry.
A week of correction accompanied by large-scale liquidations
The article notes that Bitcoin fell from around $72,000 to the $61,000 range within a week, Ethereum dropped 18% in 7 days, and XRP fell to around $1.12. During the same period, the total market capitalization of the crypto market fell to approximately $2.13 trillion, with most mainstream assets experiencing declines exceeding 16%.
Within 48 hours, the liquidation of leveraged positions in the market exceeded $1 billion at one point. The article argues that this reflects the rapid withdrawal of borrowed funds when sentiment weakens and liquidity tightens.
Funds are shifting to stablecoins and infrastructure.
Shekhar attributed the sell-off to three factors: geopolitical tensions, 13 consecutive days of net outflows from Bitcoin ETFs, and investors generally reducing their risk exposure. According to him, these factors will suppress short-term prices, but are insufficient to indicate a change in the industry's long-term trend.
In his view, the focus of this market round should be on the flow of funds, not just the outflow. Some funds have not left the crypto space, but have instead shifted to sectors outside of mainstream cryptocurrencies, including tokenization, stablecoins, blockchain infrastructure, and crypto allocations on corporate balance sheets.
The focus will now shift to the bill and the Federal Reserve.
The article also mentions that last week's unexpectedly strong US jobs data, continued tensions in the Middle East, and policy signals ahead of the Federal Reserve's June 16-17 meeting all exacerbated the pressure on risk assets. Shekhar believes that the correlation between crypto assets and traditional markets is strengthening, and the high correlation between Bitcoin and the S&P 500 is no longer a short-term phenomenon.
The market will now focus on four key areas: the progress of the US Clarity Act, whether Bitcoin ETF funds have shifted from net outflows to net inflows, the activity levels of developers and users on major networks such as Solana, and the policy signals released by the Federal Reserve's June meeting.
The CLARITY bill, which passed a bipartisan vote on the Senate Banking Committee in May, is now on the Senate legislative agenda. The article argues that if the bill passes, the regulatory boundaries for digital assets in the US will be clearer, potentially reducing institutional investor hesitancy. Regarding ETFs, the article notes that there have been 13 consecutive trading days of net outflows, totaling approximately $4.33 billion. A reversal of this trend would be seen as a direct signal of a recovery in institutional risk appetite.
