The crypto market is moving in the opposite direction to equities

Market overview

The crypto market’s market capitalisation has fallen by 1% over the past 24 hours, returning to levels last seen in mid-July. The positive momentum the market showed in the first half of last week failed to take hold. Once again, we are seeing a negative correlation with the Nasdaq 100 index, this time in the form of falling cryptocurrencies while shares rise. Could this be becoming the new norm?

Bitcoin is dragging the entire market down to last week’s lows after falling below $63K. A brief and tentative rebound on Sunday proved to be a failed attempt to return above the 50-day moving average. Such a plunge clearly highlights the difficulties faced by the bulls in their attempt to convince the wider market of a reversal in the bear market that began last September.

Bitcoin rose by 7.3% in July to $62.9K, following its steepest monthly decline in four years in June. From a seasonal perspective, August is considered the most unfavourable month for BTC. Over the past 15 years, Bitcoin has ended the month with gains on only five occasions and has fallen ten times. Meanwhile, the last four years have all been unfavourable for Bitcoin. The average decline was 13.8%, while the average gain was 14%. 

News background

Strategy reported a net loss of $8.2 billion for the second quarter, compared with a profit of $10 billion for the same period last year. The main reason for this was the so-called unrealised, ‘paper’ losses due to the fall in the value of Bitcoin held in reserves.

Strategy will continue to sell Bitcoin as commercially viable, but is no longer committed to automatically reinvesting all capital raised through share sales into BTC, as stated by the company’s CEO, Phong Le. The primary objective will be to bring the price of STRC preferred shares back into the $99–100 range.

US Treasury Secretary Scott Bessent has called on the Senate to put the CLARITY Act to a vote without delay and accused the Democrats of dragging out the process for political reasons. He pointed out that the House of Representatives approved the bill over a year ago.

Quantum Solutions, Japan’s largest public holder of Ethereum, has announced the sale of 1,000 ETH for $1.9 million. The company intends to use the proceeds to fund data centre services for the development of its artificial intelligence business.

Tether’s excess reserves halved over the quarter, falling to $4.11 billion. The volume of USDT in circulation rose by $446 million over the quarter to $184.6 billion. The number of users increased by more than 30 million, exceeding 650 million, said Tether CEO Paolo Ardoino.  

Summary: The crypto market is falling again: Bitcoin is dragging the market down, August is seasonally weak for BTC, and the news is heightening investor caution.