While bitcoin is eyeing an August gain for the first time in three years, the cryptocurrency is still lagging U.S. stocks for the month.
- Bitcoin is trading near $11,610 at press time, representing a 2.27% gain on a month-to-date basis, according to CoinDesk's Bitcoin Price Index.
- The cryptocurrency last printed gains in August in 2017, when prices rallied by 66%.
- As of Friday, the S&P 500, Wall Street's benchmark stocks index, was eyeing a 7.25% gain for August, as per data provided by TradingView.
- Bitcoin faced rejection at highs above 12,400 on Aug. 17 and has been restricted largely to a range of $11,100 to $11,800 ever since.
- The rally from July lows below $9,000 has stalled with the weakening of demand from institutions and macro traders, as indicated by the recent 30% decline in open positions in futures listed on the Chicago Mercantile Exchange.
- On Friday, CME-listed open interest was $653 million, down from the record high of $948 million reached on Aug. 17, according to data source Skew.
- Bitcoin's rally from $9,000 to $12,400 observed in the four weeks to Aug. 17 was accompanied by a 150% surge in open interest.
- It's possible investors have been rotating money out of bitcoin and into cryptocurrencies linked to the white-hot decentralized finance (DeFi) space.
- The Lend token from decentralized lending platform Aave has gained 150% this month.
- Other DeFi names like oracle provider Chainlink's LINK token and lending project Compound's COMP token have added 108% and 55%, respectively.
- Ethereum's ether cryptocurrency is also outshining bitcoin on a monthly basis with over 20% gains.
- Looking ahead, however, negative-yielding government bonds are expected to continue powering gains in both bitcoin and stocks.
- Bitcoin is still down 40% from its record high of $20,000 and looks relatively undervalued compared to U.S. stocks, which are trading at record highs even amid the ongoing coronavirus epidemic.
- A potential correction in stocks still poses downside risks to bitcoin, according to Joel Kruger, a currency strategist at LMAX Digital.
- "Bitcoin is still an emerging asset and therefore still somewhat exposed in periods of risk off," Kruger told CoinDesk in a Telegram chat.
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