Bitcoin is down 13 percent so far in June, suffering its worst week since February.

On June 4, CNBC reported that bitcoin’s weakness is deepening as the core narrative that had driven the market has faded and major funds have shifted to other assets.

A key factor weighing on the market is the flow of funds into spot exchange-traded funds (ETFs). By SoSoValue’s tally, bitcoin spot ETFs recorded net outflows for 13 straight sessions through June 4. That is the longest streak on record.

Total assets in the ETFs also shrank to $82.8 billion from $107.8 billion on May 14. Citi analyst Alex Saunders said ETF fund flows are a key variable behind bitcoin price gains and account for about 45 percent of changes in weekly returns. He also called them the best indicator for tracking investor demand and the level of adoption.

Weaker policy expectations are another burden. Saunders said the chances of passing the market structure bill known as the CLARITY Act are receding further due to shifting legislative priorities and disagreements over key provisions. He said market sentiment is likely to remain weak unless there are regulatory positives or concerns over currency debasement stemming from fiscal instability.

The immediate trigger for this week’s decline was Strategy’s disclosure on June 2 that it sold 32 bitcoin for about $2.5 million. It was the first sale since 2022 and the second in the company’s history. The sale was less than 0.004 percent of Strategy’s bitcoin holdings, but it shook investor sentiment as it was seen as a departure from the company’s stance that it would never sell bitcoin.

Liquidation of leveraged positions then amplified the slide. When investors betting on a price rise are forced out of their positions, exchanges automatically sell holdings to cover losses. CoinGlass data showed long liquidations on cryptocurrency exchanges totaled $594 million over 24 hours.

It has also become clear where the money is going. Recently, bitcoin has failed to gain traction from any of its established narratives, whether as digital gold in times of geopolitical risk, an inflation hedge or a tech stock. Stock markets, by contrast, extended a record-high trend, and investors paid more attention to a semiconductor rally and artificial intelligence (AI) infrastructure. Unlisted growth companies such as SpaceX and Anthropic also drew interest from growth-stock investors.

Market attention is now turning to Strategy’s disclosures next week. Investors will be able to see whether Strategy bought bitcoin again this week, sold more, or made no move. If the company moved aggressively to buy after last week’s small sale, it could help stabilise bitcoin prices, but if it sold or stood pat, concerns could grow that one of the cryptocurrency market’s key sources of demand has weakened.

Standard Chartered’s Geoff Kendrick said Strategy has previously bought back more bitcoin just two days after selling and he sees this time’s post-sale buying potentially being more aggressive. If that scenario materialises, the market could interpret it as an early sign that a bottom is forming, he said.

A separate view is that the bearish phase could persist over the medium to long term. Ginsburg said that while bitcoin is moving independently of its core narratives, the four-year cycle itself still serves as a valid benchmark. Applying the average time it takes to form a bottom from the peak and the size of the decline, he suggested a bottom could form below $40,000 in late October and said the current target range has not deviated much yet.

This correction has again shown that bitcoin prices do not move solely on risk-on sentiment. With ETF flows, regulatory expectations and Strategy’s trading activity all shaken at the same time, it highlights how sensitive the cryptocurrency market’s supply-demand structure is.