"RBC-Crypto" does not provide investment advice; the material is published for informational purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.
Cryptocurrency is less dependent on stock market dynamics, and investors have become more positive towards Bitcoin, stated Robert Mitchnick, Head of Digital Assets at asset management company BlackRock. He made this statement against the backdrop of a slump in the artificial intelligence (AI) sector, where Bitcoin's price performance was significantly better than that of AI company stocks.
Over the past month, BlackRock has observed a noticeable, though not overt, shift in investment sentiment. It is noted that at the beginning of the year, stocks of companies in the AI sector were rising while Bitcoin was falling. However, "in July, when AI company stocks corrected, Bitcoin showed significantly better dynamics," noted Mitchnick.
Since the beginning of the year, Bitcoin has lost over 25%, trading around $64k as of August 11th. During the same period, the NASDAQ index, which tracks the largest technology company stocks, rose more than 17%. The dynamics changed in July: NASDAQ lost almost 7%, while Bitcoin gained the same percentage points.
South Korea's KOSPI index, half of which consists of technology companies, including many organizations operating in the AI sector, fell by 22% in July, and nearly 35% from its June peak.
Bitcoin Price
Mitchnick also touched upon the topic of Bitcoin's historical price dynamics, stating it "has always been a volatile asset": "During this time, it has already gone through five major boom and bust cycles. Each time, a new cycle ended at a significantly higher level than the previous one, although the path there was not easy. The same thing is happening now."
Although Mitchnick did not specify the prices or timeframes of these cycles, they can be read about in separate company reviews. In one of the latest reports on cycles, the company noted that the duration of price declines from cycle peaks to lows ranged from 12 to 14 months. The range of Bitcoin's drawdown from peak to low was also indicated - 77-83%.
Analysts also calculated that the recovery of the price to the level of the previous peak took from 849 to 1085 days. BlackRock's position on cycles is not unique, is based on statistics, and has existed in the market for over 10 years. Historical data indicates that if the pattern of Bitcoin's price movement continues, the cycle bottom could be reached by the end of the year.
Crypto Investors' Interest in Stocks
Since the beginning of the year, the dynamic of stock price growth relative to Bitcoin's weakness, noted by Mitchnick, has been accompanied by a flow of crypto companies, investors, developers, and cryptocurrency traders into the AI sector. Even on crypto exchanges, there is a trend of traders initially focused on cryptocurrencies switching to stocks of AI companies involved in artificial intelligence and semiconductors.
Regarding trading, interest in AI and traditional company stocks has led to an increase in trading volumes for such instruments. Experts report that crypto exchanges have been massively introducing traditional financial instruments, turning into hybrid platforms, and the era of native cryptocurrencies has been replaced by the era of tokenized stocks.
This has also led to high revenue concentration among crypto projects, where the decentralized perp trading exchange Hyperliquid has emerged as the market leader. Together with Pump.fun, they capture almost 70% of all application revenue in the crypto industry.
The trend is confirmed by the rapid growth in trading volumes of traditional assets (real-world assets, RWA) in the form of tokens or perpetual futures ("perps"). Cryptorank analysts noted that in July, the monthly trading volume of RWA-perps reached a record $141 billion, increasing by approximately 19.5% month-over-month. And the main driving force was precisely company stocks.
