Bitcoin still underperforming stocks since early August deleveraging event: Coinbase
Quick Take
- Bitcoin has underperformed relative to stocks since experiencing a significant deleveraging earlier this month, according to Coinbase.
- On Aug. 4, bitcoin experienced a sharp sell-off alongside equities, marking one of the most severe downturns for risk assets since the “Black Monday” crash of 1987.
Bitcoin has not performed as well as U.S. stocks and other macro assets over the past few weeks following the widespread deleveraging in early August.
On Monday, Aug. 4, the cryptocurrency market shed approximately $367 billion in value within a 24-hour period. This selloff coincided with a broader decline in equities in one of the worst days for risk assets since the "Black Monday" crash of 1987.
Since the early August deleveraging event, bitcoin has underperformed equity indices, according to Friday's Coinbase Weekly report.
"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," Coinbase analysts David Duong and David Han said.
Lack of narrative catalyst to drive bitcoin price
The analysts added that bitcoin's recent price performance has been choppy, trading inside a fairly tight range, consistent with concerns over the lack of a new idiosyncratic narrative to drive the asset's price performance.
"Bitcoin prices have struggled to fully recover since early August. A lack of narratives, and the fact that September is a seasonally tough period for crypto, is keeping traders on the sidelines," Duong and Han added.
The analysts said this is primarily due to tapering exchange-traded fund (ETF) flows, bitcoin-specific supply overhangs, and a recovery in the multilateral U.S. dollar index, which may be acting as a drag on crypto performances.
"That said, ether has continued to underperform bitcoin, with ETH/BTC reaching new year-to-date lows amidst spot Ethereum ETF outflows," they added.
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