Bitcoin Underperforms Compared to U.S. Stocks

Bitcoin (BTC) has not performed as well as U.S. stocks and other macro assets over the past few weeks after the widespread deleveraging in early August.

On Monday, Aug. 4, the cryptocurrency market lost about $367 billion in value within 24 hours. This selloff aligned with a broader decline in equities, marking one of the worst days for risk assets since the “Black Monday” crash of 1987.

According to Friday’s Coinbase Weekly report, bitcoin has underperformed equity indices since the early August deleveraging event.

“On a risk-adjusted basis, bitcoin price is currently 0.50 standard deviations below its three-month average, compared to the S&P 500, where index levels are actually 1.41 standard deviations above their three-month average,” said Coinbase analysts David Duong and David Han.

Lack of Narrative Catalyst to Drive Bitcoin Price

The analysts noted that bitcoin’s recent price performance has been volatile, trading within a relatively tight range due to the absence of a compelling narrative to influence the asset’s price movements.

“Bitcoin prices have struggled to fully recover since early August. A lack of narratives, combined with the historically tough month of September for crypto, keeps traders on the sidelines,” Duong and Han explained.

The analysts also pointed out that tapering exchange-traded fund (ETF) flows, bitcoin-specific supply overhangs, and a recovery in the multilateral U.S. dollar index may negatively impact crypto performance.

“Nonetheless, ether has continued to underperform bitcoin, with ETH/BTC reaching new year-to-date lows amidst spot Ethereum ETF outflows,” they concluded.