Bitcoin (BTC) has struggled to match the performance of U.S. stocks and other major macro assets over the past few weeks. The cryptocurrency market experienced a dramatic selloff in early August, with a staggering $367 billion evaporating within just 24 hours. This sharp decline mirrored broader equity market losses, marking one of the most severe downturns for risk assets since the infamous “Black Monday” crash of 1987.
In the wake of this turmoil, Bitcoin has notably underperformed against equity indices. According to the latest Coinbase Weekly report, the cryptocurrency’s risk-adjusted performance is trailing significantly. Coinbase analysts David Duong and David Han reveal that Bitcoin is currently 0.50 standard deviations below its three-month average. In contrast, the S&P 500 is 1.41 standard deviations above its three-month average, highlighting a stark divergence in performance between traditional equities and digital assets.
The lackluster performance of Bitcoin is compounded by a few key factors. The absence of a compelling narrative or new developments to drive Bitcoin’s price is one of the primary reasons for its recent stagnation. “Bitcoin prices have struggled to fully recover since early August,” Duong and Han note. “A lack of narratives, coupled with September’s historically challenging period for crypto, has left traders hesitant.”
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Moreover, the analysts point out that tapering exchange-traded fund (ETF) flows and Bitcoin-specific supply issues are contributing to the cryptocurrency’s weak performance. Additionally, the recent recovery of the multilateral U.S. dollar index appears to be exerting downward pressure on crypto assets. “Ether, in particular, has continued to lag behind Bitcoin,” they add, “with the ETH/BTC ratio hitting new year-to-date lows amidst outflows from spot Ethereum ETFs.”
As Bitcoin navigates through these turbulent waters, the broader crypto market remains cautious. With the seasonal challenges of September and a lack of fresh catalysts to ignite a rally, Bitcoin’s path forward remains uncertain. For now, investors and traders alike will be closely watching for any signs of a turnaround or new developments that could potentially reshape the landscape for the leading cryptocurrency.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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