Stocks and bonds outperforming Bitcoin leading to concerns of a slowdown in cryptocurrencies
Bitcoin’s journey in 2024 has encountered some challenges, sparking concerns about a potential slowdown in the cryptocurrency market. Despite hitting a record high of $74,000 earlier this year, driven by 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. According to Bloomberg, global equities, fixed income, and commodities have all seen better returns than Bitcoin, which has experienced a 5% drop. This performance gap suggests a possible slowdown in the cryptocurrency market as traditional assets shine while Bitcoin struggles.
Although Bitcoin reached a peak of $73,798 in March, it has failed to maintain its momentum. Factors that previously drove enthusiasm, such as inflows into U.S. Bitcoin ETFs and optimism over potential Federal Reserve interest rate cuts, no longer seem to be boosting Bitcoin’s performance.
Analysts have observed a shift in demand for Bitcoin products, with existing Bitcoin holders contributing a significant portion of subscriptions to the new U.S. Bitcoin ETFs. JPMorgan Chase strategists have also examined the demand for Bitcoin products, noting that about $15 billion in net inflows have been attracted to date. However, they express skepticism about the pace of inflows continuing for the rest of 2024.
Crypto market analysts anticipate another three months of underperformance before Bitcoin resumes its upward trend. Bitcoin has been consolidating for 92 days, with analysts speculating that this prolonged stability could set the stage for a significant rally in the future.
One of the key reasons for Bitcoin’s struggle to surpass the strong resistance levels of $69,000-$70,000 is the strong miner capitulation. Bitcoin miners’ revenue in USD has dropped to a six-month low, indicating financial pressure on miners that could impact Bitcoin’s price dynamics.
Analyst Rekt Capital notes that Bitcoin has been consolidating between $60,600 and $71,500 in a sinusoidal pattern for three months. He suggests that this consolidation could continue for another three months before a potential upward rally.
As of now, Bitcoin is trading at just under $66,283 with a 1.09% decrease in one day. While traditional assets continue to outperform Bitcoin, the prolonged consolidation period and miner capitulation present a mixed outlook for the cryptocurrency. Analysts are divided in their predictions, but some anticipate a significant rally once Bitcoin breaks out of its current range.