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The crypto market experienced a significant downturn on Friday as profit-taking intensified and concerns over trade policies and Federal Reserve decisions weighed on investors. The decline was led by major cryptocurrencies, including Bitcoin, and extended to several altcoins, reflecting broader market unease.

Bitcoin Price Declines Amid Market Sell-Off

Bitcoin saw its price drop to $105,500, retreating from its all-time high of $111,900 recorded last week. This decline marks a notable pullback after its recent rally. Historically, Bitcoin often experiences price corrections following record highs or significant milestones.

Altcoins Feel the Pressure

The market downturn also affected altcoins, with some of the top performers from previous weeks taking sharp hits. Notable decliners included PancakeSwap, Raydium, Ethena, and Arbitrum, all of which dropped by over 10%. The broader altcoin market tends to follow Bitcoin’s lead, amplifying losses during downturns.

Massive Liquidations Highlight Market Volatility

The crypto market crash triggered a significant wave of liquidations. Data shows that 24-hour liquidations surged by 125% to $709 million. Nearly 224,000 traders were liquidated, with the largest single loss recorded at nearly $13 million. Such events underscore the volatile nature of the cryptocurrency market, particularly during periods of heightened uncertainty.

Factors Driving the Crypto Market Downturn

Several key factors contributed to the ongoing market decline:

  • Profit-Taking After a Rally: Bitcoin’s recent rally to an all-time high prompted many investors to take profits, leading to a pullback in prices.
  • Seasonal Trends: Historically, June has been one of the weaker months for the crypto market, with Bitcoin averaging returns of -0.35%. Many investors tend to reduce activity at the start of the summer season.
  • Trade Concerns: Lingering uncertainties around trade policies, including court rulings on tariffs, have added to market jitters.
  • Federal Reserve Decisions: Recent minutes from the Federal Reserve suggested a wait-and-see approach on interest rates, which remain steady at 4.50%. This cautious stance has introduced further uncertainty into the financial markets.

Is the Bull Run Over?

Despite the current downturn, both technical and fundamental indicators suggest that the crypto bull run may still have room to grow. Bitcoin’s recent price action aligns with the formation of a cup and handle pattern and a bullish flag pattern, both of which historically signal potential for further gains. These patterns could pave the way for a breakout and a rally in the altcoin market.

Supply and Demand Dynamics Support a Rebound

Additionally, Bitcoin’s supply and demand dynamics remain favorable. Institutional interest continues to rise, with ETFs bringing in over $45 billion in inflows and more companies adding Bitcoin to their treasuries. On the supply side, the amount of Bitcoin on exchanges has dropped significantly, from 3.5 million in 2020 to 1.35 million today. This reduced supply on exchanges, coupled with increasing demand, suggests that Bitcoin may recover in the near future.

The current market correction, while significant, appears to be a natural part of the cryptocurrency market cycle. Investors should remain cautious but optimistic, keeping an eye on both technical patterns and broader market trends.

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