According to CoinGecko, the total market cap dropped to $2.93 trillion in late trading on Thursday. Since early October, when the market reached an all-time high of around $4.4 trillion, total capitalization has fallen roughly 33% and is down nearly 14% year-to-date. This decline has led many analysts and observers to declare that the bear market has begun.

The market had previously dropped to $2.5 trillion on April 9, 2025, before climbing to all-time highs six months later. Since March 2024, the market had largely traded sideways and has now returned to the middle of that range.

Bank of Japan Hikes Rates

Michaël van de Poppe, co-founder of MN Fund, said on Friday that more short-term pain is likely and the downward trend may continue until the Bank of Japan makes its interest rate decision. Japan’s central bank raised rates to 0.75% Friday morning. While some analysts said this could be negative for crypto, Bitcoin BTC $87,165 rose by 2.3%.

Van de Poppe said: “I wouldn’t be surprised if BTC continues to cascade and enters a form of capitulation in the next 24 hours. This would imply a 10-20% drop in altcoins, which should then bounce quickly.”

Social Sentiment at Rock Bottom

Blockchain analytics platform Santiment reported that crypto sentiment is back at fear levels following a minor pump-and-dump on Thursday.

“Bitcoin bounced to $90.2K yesterday and quickly retraced to $84.8K. Commentary mainly shows fear. Bearish mentions, especially #selling, #sold, #bearish, or #lower, are notably higher across X, Reddit, and Telegram. Historically, when retail pushes the bearish narrative harder than bullish, prices often move opposite to the crowd. This fear-marked volatility is a strong signal for those patient enough to ride it out,” Santiment noted.

“Prices moving opposite to crowd expectations and volatility marked by fear are a good signal for patient investors.”

Meanwhile, the Crypto Fear & Greed Index is at 16, signaling “extreme fear,” and has remained below 30, in “fear” territory, since early November.

Why It Matters

The crypto market returning to an 8-month low highlights declining investor risk appetite and the impact of macroeconomic pressures. Social sentiment dominated by fear signals potential short-term buying opportunities while providing crucial insight for institutional strategy.

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Institutional Interest in Bitcoin ETFs Peaks 

According to Foresight News and SoSoValue data, Spot Bitcoin ETFs saw a net inflow of $589 million on June 24 alone. This figure marks the highest inflow in the ongoing 11-day streak of consistent ETF entries. BlackRock’s IBIT fund contributed a major share of this influx. This robust movement reinforces institutional confidence in Bitcoin. The total net asset value of Spot Bitcoin ETFs has now reached approximately $130 billion, accounting for 6.18% of Bitcoin’s total market capitalization. The historical net inflow amount stands at $47.6 billion. 

BlackRock’s IBIT fund alone accounted for $217 million of this inflow. Fidelity’s FBTC product saw $105 million, while the Bitwise ETF recorded a $15 million net inflow. 

More importantly, these types of inflows exert upward pressure on the market. Bitcoin managed to hold above $104,000 in response to this fund flow, indicating that investors are anticipating a new bullish wave. 

Ethereum ETFs Off to a Strong Start 

Ethereum ETFs also attracted significant inflows. On the same day, Spot Ethereum ETFs recorded a total of $71.24 million in net inflows. BlackRock’s ETHA fund stood out with an inflow of approximately $98 million. On the other hand, Fidelity’s FETH fund experienced an outflow of around $27 million. 

According to experts, this data signals a strong start for Ethereum ETFs. Following regulatory approval, Ethereum is expected to attract strong institutional demand, much like Bitcoin. 

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Core Inflation and Fed Interest Rate Expectations  

Federal Reserve officials and market participants are closely monitoring the impact of this inflation increase on interest rate policies. Members of the Federal Open Market Committee (FOMC) have previously indicated that they may delay rate cuts if inflation remains higher than expected. For instance, Fed Chair Jerome Powell recently stated, “Controlling inflation remains our priority.”  

Following May’s data, the likelihood of a rate cut in June has significantly diminished. According to the Kalshi prediction platform, rate cut expectations have dropped sharply. This shift has affected investors’ risk appetite, causing new volatility in financial assets.  

Liquidity and Inflation Reaction in Crypto Markets  

Global liquidity growth has fueled gains in cryptocurrency markets. Experts note that Bitcoin rose 4% to $110,000, moving in sync with the increase in M2 money supply. Other cryptos like Ethereum and Solana also saw similar gains. Analysts highlight that Bitcoin tends to follow changes in M2 money supply within a 71-day cycle.  

Investors eagerly await the June 11 CPI report. This data will reveal whether inflation is persistent and what path the Fed will take. Markets expect interest rates to remain around 425-450 basis points. However, inflation continues to rise. In this environment, the Fed prefers to wait before cutting rates. Federal Reserve officials, especially Chair Jerome Powell and St. Louis Fed President Alberto Musalem, have indicated they would not consider rate cuts if inflation becomes persistent.  

Traditional assets such as bonds and stocks could remain pressured due to inflation. Meanwhile, cryptocurrencies continue to benefit from increased global liquidity, deepening the divergence between markets.  

In summary, today’s US CPI report will be the most critical data guiding the markets.  

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