The crypto boom might be waning away as traditional assets like stocks and bonds have outperformed Bitcoin this quarter. This depicts that BTC lost its charm after the bullish run seen in the first quarter.
Why is Bitcoin lagging?
As per reports, Global equities and commodities have all outpaced Bitcoin as the biggest asset dropped about 5% since early April. After stocks, even gold has outshone BTC over this period. However, Bitcoin set a record high of $73,798 in March.
Since then it has struggled to maintain its upward momentum with rallies repeatedly losing steam. Factors that previously sparked enthusiasm, such as inflows into US Bitcoin exchange-traded funds (ETFs) and hopes for Federal Reserve interest rate cuts, no longer seem to drive the market as strongly.
JPMorgan Chase & Co. strategists, led by Nikolaos Panigirtzoglou, have also examined the demand for Bitcoin ETFs, which have seen approximately $15 billion in net inflows according to Bloomberg data. They estimate that a significant portion of these inflows may be a rotation from digital wallets on exchanges to the new ETFs.
Adjusting for this, the strategists calculate this year’s net flow into crypto assets — including ETFs, venture capital fundraising, and CME Group futures at about $12 billion, markedly lower than the $45 billion in 2021 and $40 billion in 2022. They remain skeptical that the current pace of inflows will persist throughout 2024.
What’s next?
Bitcoin was trading at $66,750. Despite quadrupling since the start of last year, recovering from a severe bear market in 2022, Bitcoin’s performance this quarter lags behind traditional assets. Bloomberg’s indices for global bonds, equities, and raw materials have all remained flat or risen by more than 5%, surpassing Bitcoin’s returns.
A contributing factor to Bitcoin’s recent stagnation might be increased sales by Bitcoin miners facing tougher conditions. Miners, who receive Bitcoin as a reward for validating transactions on the blockchain, saw their rewards halved in April, part of a periodic event that reduces mining incentives. This halving has created a more challenging environment for mining operations, potentially leading to more selling pressure in the market.
While Bitcoin enthusiasts predict future prices of $100,000 or higher, critics argue that cryptocurrencies lack intrinsic value. For now, Bitcoin’s underperformance compared to traditional assets raises questions about the sustainability of the recent crypto rally.
The crypto boom might be waning away as traditional assets like stocks and bonds have outperformed Bitcoin this quarter. This depicts that BTC lost its charm after the bullish run seen in the first quarter. Why is Bitcoin lagging? As per reports, Global equities and commodities have all outpaced Bitcoin as the biggest asset dropped […] Read MoreNews, Bitcoin, Crypto, SEC
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