Crypto Stocks Lose Momentum Following 500% Increase

Crypto equities, which had previously outperformed Bitcoin significantly over the last 18 months, are now showing signs of weariness.

With a broader market downturn, investors seem to be retreating from riskier investments.

No IPO, No Catalyst

Following an exceptional 18-month period, crypto equities are starting to lose their edge compared to Bitcoin, as detailed in the latest report published by Matrixport. The 10x Research Crypto Stocks Index saw a rise of up to 500% during this time, far exceeding Bitcoin’s 117% increase.

However, recent declines in major players like Strategy, Coinbase, and Metaplanet have caused the index to drop, currently settling at 427%. The slowdown has been exacerbated by Circle’s IPO, which, despite initial excitement, could not sustain investor interest, indicating waning enthusiasm for new public offerings.

Institutional involvement seems to have also diminished. This reduction may be partly attributed to the typically slower summer months, leaving the sector devoid of robust catalysts. With no major crypto IPOs anticipated soon, Matrixport suggests that equities might enter a consolidation phase, while Bitcoin continues to perform relatively steadily.

Crypto equities had another tough session on August 20, with Strategy and Coinbase both experiencing further declines reflecting a broader risk-averse sentiment. Coinbase (COIN) dropped approximately 2% in early trading to $296, while Strategy (MSTR) fell even more sharply, dropping 2% to $330. USDC issuer, Circle (CRCL), also fell by 3.62% to $130.34, losing nearly $5 during the same timeframe.

Cautious Market

In the last 24 hours, Bitcoin’s price has dipped by 2% to just above $112,500, while Ethereum has recovered from its recent downturn, now trading at $4,300.

QCP Capital noted that all attention is on Fed Chair Jerome Powell’s forthcoming comments during this week’s Jackson Hole symposium, as his insights will influence monetary policy amid the fragile balance between curbing inflation and escalating labor risks.

Despite favorable trends in the crypto sector, like the passage of the GENIUS Act and institutional uptake surpassing $100 billion, the recent sell-off underscores that short-term sentiment remains precarious.

According to the firm, risk assets could face further fluctuations if Powell endorses a hawkish stance or if labor and inflation figures exceed expectations.