Bank of America analysts believe that August could be a challenging month for US stocks and therefore advised investors to pay attention to safer options in the form of the US dollar and gold.
Now the main question for crypto investors is whether Bitcoin will follow the dynamics of technology company stocks or will function similarly to digital gold. The answer will likely depend on understanding what initially caused the market decline.
In the future, much will depend on whether interest rates rise and whether global crises occur. According to statistics, in such cases, Bitcoin has often behaved like other risky investments.
The difference from previous cycles this year may lie in the fact that institutional investors now own a much larger share of Bitcoin through ETFs, hedge funds, asset management companies, etc. When such investors are forced to reduce risk, they often sell everything, including their cryptocurrency.
Under such a scenario, Bitcoin could suffer alongside stocks, as during the Fed's rate hikes in 2022 or the unwinding of the global carry trade strategy in August 2024. In each such episode, Bitcoin first fell but then recovered.
If stocks fall due to concerns about government debt, a loss of confidence in fiat currencies, expectations of additional stimulus measures from central banks, or new liquidity injections, Bitcoin could act as a safe-haven asset.
Moreover, during turmoil, capital usually flows into scarce assets such as gold, Bitcoin, and less frequently into US Treasury bonds.
Regardless of the scenario, Bitcoin's dependence on retail traders has decreased as more companies add Bitcoin to their corporate cash reserves. Coinglass data shows that publicly traded companies hold approximately 1.25 million $BTC, which is more than 6% of the total supply.
In addition, exchange-traded funds (ETFs) hold hundreds of thousands of $BTC on behalf of their investors, with BlackRock (IBIT) leading with 735,800 bitcoins.
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