Bitcoin and the broader crypto market are facing significant challenges this August, even as global stocks rebound and approach record highs. While traditional markets like the MSCI World Share Index have gained nearly 1% and gold has surged to new heights, Bitcoin has dropped about 9% this month. This contrast highlights the current struggles in the crypto space.
One key issue weighing on Bitcoin is the risk of sell-offs by the US government, which holds approximately $12 billion worth of seized crypto assets. Recently, $600 million of confiscated Bitcoin was transferred to a wallet on Coinbase, leading to fears of potential market sales. This has added to the downward pressure on Bitcoin’s price.
On August 5, a significant sell-off occurred across the top 100 digital assets, marking the worst drop since November 2022. This was partly triggered by global concerns over US economic growth, which initially hurt risk appetite across various markets. However, while traditional markets have since stabilized and recovered, the crypto market has not seen the same level of confidence return.
Bitcoin’s decline is also reflected in the funding rate for perpetual futures on Binance, which is now at its most negative level since 2022. This suggests that speculators are losing interest, contributing to the ongoing price struggles.
Despite hitting a record high of $73,798 in March, driven by optimism about looser US monetary policy and inflows into dedicated exchange-traded funds (ETFs), Bitcoin has faced challenges in maintaining its momentum. Political uncertainty in the US, especially with the upcoming presidential race between pro-crypto Republican Donald Trump and Democratic Vice President Kamala Harris, has also contributed to Bitcoin’s recent volatility.
As of Monday morning in London, Bitcoin was down 2% at $58,630, with other major cryptocurrencies like Ether and Solana showing mixed performance.
