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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.