(Bloomberg) -- Bitcoin and the wider crypto market are nursing sharp losses for the month so far even as global stocks push back toward record highs after shaking off a growth scare over the U.S. economy.
The largest digital asset has fallen about 10 per cent in August, lagging a gain of almost one per cent in MSCI Inc.’s world share index as well as a jump in gold to all-time highs. A Bloomberg global bond gauge has added nearly two per cent over the same period.
Analysts flagged the risk of disposals of Bitcoin seized by the U.S. government — which is thought to hold roughly US$12 billion worth of crypto — as among the challenges for digital assets. Blockchain data indicates the U.S. last week moved $600 million of confiscated Bitcoin to a wallet on the exchange operated by Coinbase Global Inc., according to an analysis by Arkham Intelligence.
Possible U.S. government sales are “resulting in this temporary downward price pressure,” said Khushboo Khullar, venture partner at Lightning Ventures, which invests in Bitcoin-linked firms. “We expect this gap to close soon,” she added.
Big selloff
A gauge of the top 100 digital assets suffered its worst drop on Aug. 5 since November 2022. The retreat came alongside a plunge in equities as U.S. growth fears and an unwinding yen carry trade damaged risk appetite worldwide.
Expectations for the U.S. economy have since stabilized on reassuring data and MSCI’s global share index is now just 1.5 per cent below a record set in July.
Appetite for crypto exposure, in contrast, is fraying. One example of that comes from the so-called funding rate for Bitcoin perpetual futures on the Binance exchange, the largest for digital assets.
These contracts are often used by speculators as they have no set expiry. But CryptoQuant figures show the funding rate — the cost for the positions — is the most negative since 2022, signaling diminished ardor from fast-money traders.
Bitcoin hit a record of $73,798 in March, lifted by bets on looser U.S. monetary policy and inflows into dedicated U.S. exchange-traded funds. Subscriptions for the seven-month-old ETFs subsequently cooled.
More recently, U.S. politics has whipsawed the token as pro-crypto Republican Donald Trump and Democratic opponent Vice President Kamala Harris vie in the presidential race. Harris has yet to detail a digital-asset policy stance.
Bitcoin dipped 3.1 per cent to trade at around $58,000 as of 11 a.m. on Monday in London, while other major tokens such as Ether and Solana were mostly lower.
©2024 Bloomberg L.P.
