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Bitcoin and the broader cryptocurrency market are experiencing significant losses in August, despite a rebound in global stocks and other asset classes. The largest digital asset has fallen approximately 9% this month, underperforming compared to MSCI Inc.’s world share index, which has gained nearly 1%, and a surge in gold prices to record highs. A Bloomberg global bond gauge has increased by nearly 2% over the same period.
Challenges for Bitcoin and Crypto Market
Analysts point to potential sales of Bitcoin seized by the US government as a key challenge for digital assets. The US government is estimated to hold roughly $12 billion worth of crypto, and recent blockchain data shows that $600 million of confiscated Bitcoin was moved to a Coinbase Global Inc. wallet last week, according to Arkham Intelligence. Khushboo Khullar, a venture partner at Lightning Ventures, attributes the current downward pressure on Bitcoin prices to these potential sales, though she anticipates this impact will be temporary.
Market Volatility and Speculative Sentiment
The top 100 digital assets index saw its steepest drop on August 5 since November 2022, aligning with a broader market retreat amid US growth concerns and unwinding yen carry trades. While expectations for the US economy have stabilized, leading to a near-record high in MSCI’s global share index, crypto market sentiment remains weak. Funding rates for Bitcoin perpetual futures on the Binance exchange—often used by speculators—are at their most negative since 2022, reflecting diminished enthusiasm among fast-money traders.
Political and Policy Uncertainties
Bitcoin’s peak of $73,798 in March was driven by expectations of looser US monetary policy and inflows into dedicated US exchange-traded funds (ETFs). However, interest in these ETFs has cooled in recent months. Additionally, the ongoing US presidential race, with pro-crypto Republican Donald Trump and Democratic opponent Vice President Kamala Harris, has introduced further uncertainty. Harris has yet to outline her stance on digital assets.
As of Monday afternoon in New York, Bitcoin has dipped 2% to around $58,600, with other major tokens such as Ether and Solana also experiencing declines.
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