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Bitcoin is already in the lazy days of summer as June trading kicks off. The benchmark cryptocurrency is coming off its first down month of the year – shoved to the side by investors who were more focused on new developments in artificial intelligence , the possibility that the U.S. government could default on its debt and yet another interest rate hike from the Fed in May and the possibility of one more in June or July. The crypto market leader finished May down 7.9%, according to Coin Metrics, while ether posted a 2% loss. Absent other clear catalysts – such as the U.S. regional bank crisis whose start and end coincided with the crypto rally – price movements in June will probably be determined yet again by inflation, monetary policy and regulatory updates. “Crypto investors will probably follow the economy for clues on where prices go next,” said Callie Cox, an analyst at the investment company eToro. “Bitcoin could fall into the same pattern that stocks have in low-volume summers – a slow drift higher. That’s what we’ve seen from the S & P 500, which has risen in six out of the past seven summers.” Bitcoin’s correlation with gold, which rocketed to all-time highs earlier in the year, dropped significantly toward the end of May. Its correlation with stocks is also off its highs, but their movements could start to mirror each other again. “My sense of the outlook for bitcoin and ether, is that if risk assets or even broad-based equities catch a bid, these two currencies will benefit with similar price appreciation,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. “Bitcoin and ether are likely to gather assets from the more speculative crypto currencies that investors have abandoned since the various scandals,” she added. “However, there is likely to be a wild runway to the upside until we sort out three factors: regulation, stability and commercial use.” Crypto exchange volumes in May fell to their lowest monthly level since 2020 , according to data from The Block. When volumes are low, technical analysis matters more, according to eToro’s Cox. The $30,000 level, where bitcoin’s early 2023 rally seemed to hit a wall, could be a “tough psychological level” for the crypto asset to break through, she said. Joel Kruger, market strategist at LMAX Group, highlighted this year’s high of about $31,050 and the May low of $25,810 as key levels to watch on the upside and downside. “Below $25,810 would expose deeper setbacks towards $20,000, while back above $31,050 would open the next major upside extension targeting $36,000,” he told CNBC. Crypto trading was already far from robust in May as the regional banking crisis, which had served as a positive catalyst, seemed to resolve itself, providers of liquidity left the crypto market, and the ongoing regulatory crackdown on the industry forced firms such as Coinbase to consider relocating overseas. Within the crypto industry, eToro’s Cox said she’s monitoring partnerships between big brands, and innovations on different blockchains for glimpses into growth and development in crypto. “There’s been a shift to quality within the crypto space, so investors could reward projects that prove their worth in the midst of high rates and scarce funding,” she said. Bitcoin is still up 63% this year. It posted a 71% gain for the first quarter and while it’s struggled to reach the highs of that rally, investors have been comforted by negligible pull backs, pointing to the cryptocurrency’s “resilience.” Defiance’s Jablonski said she saw a kind of setback for crypto this year, which for many may have been overshadowed by the memory of November’s FTX collapse. “Fears of liquidity and confidence in the system as a whole were tested when FTX, Silvergate and other players made investors question whether more shoes would drop, and the rise of crypto was at risk,” she said. “I think that this year is going to be a reset year for crypto, when we look back on it,” she added. “A lot of the bad actors have been taken out of the market. Prices, like growth stock valuations, have come down and made the asset more digestible, and interesting, particularly for institutional investors. The latest banking issues, and U.S. budget issues also remind us of the appeal of crypto.”