Stocks and bonds outperforming Bitcoin leading to concerns of a crypto slowdown
Bitcoin’s journey in 2024 has been turbulent, sparking concerns about a potential slowdown in the cryptocurrency market. Despite hitting a record high of $74,000 earlier this year due to the approval of spot Bitcoin exchange-traded funds (ETFs), Bitcoin’s performance in the second quarter has been lackluster, especially after the recent Bitcoin halving event.
Traditional asset classes like stocks and bonds have outperformed Bitcoin in the second quarter. Bloomberg reports that global equities, fixed income, and commodities have all seen better returns compared to Bitcoin, which has dropped by around 5%.
This performance gap suggests a possible slowdown in the cryptocurrency market, with traditional assets showing positive returns while Bitcoin struggles to regain momentum. Despite reaching a peak of $73,798 in March, Bitcoin has been unable to maintain its upward trajectory. Factors that once drove excitement, such as inflows into U.S. Bitcoin ETFs and optimism about potential Federal Reserve interest rate cuts, no longer seem to be boosting Bitcoin’s performance.
Noelle Acheson, author of the “Crypto Is Macro Now” newsletter, notes that a significant portion of subscriptions to the new U.S. Bitcoin ETFs may be from existing Bitcoin holders. This indicates that not all ETF inflows represent new money entering the market, which is essential for driving up the price.
JPMorgan Chase strategists, led by Nikolaos Panigirtzoglou, have studied the demand for Bitcoin products. According to Bloomberg, these products have attracted approximately $15 billion in net inflows so far. The strategists have observed a notable shift from digital wallets on exchanges to the new spot Bitcoin ETFs. Excluding this shift, they estimate that this year’s net flow into cryptocurrency stands at $12 billion, significantly lower than the $45 billion in 2021 and $40 billion in 2022. They are doubtful about the pace of inflows continuing for the remainder of 2024.
Crypto market analysts forecast another three months of underperformance before Bitcoin resumes its upward trend. Bitcoin has been in its lengthiest consolidation period for 92 days and counting. Analysts believe this prolonged stability could be setting the stage for a significant upward rally.
The ongoing strong Bitcoin miner capitulation has been a key factor hindering BTC’s price from surpassing the formidable resistance level of $69,000-$70,000. Recently, Bitcoin miners’ revenue in USD hit a six-month low, just above $30 million. This decrease in miner revenue underscores the financial strain on miners and their potential impact on Bitcoin’s price dynamics.
Analyst Rekt Capital has noted Bitcoin’s consolidation within a range of $60,600 to $71,500 for three months, moving in a sinusoidal pattern. He suggests that this consolidation may continue for another three months before a potential breakout.
Currently, Bitcoin is trading at slightly below $66,283, with a 1.09% decrease in the past day. As traditional assets outperform Bitcoin, the extended consolidation period and miner capitulation present a mixed outlook for the cryptocurrency. Analysts are divided, but some anticipate a substantial rally once Bitcoin breaks out of its current range.
