Crypto Stocks Lose Steam After 500% Surge

Crypto equities, which had strongly outperformed Bitcoin over the past 18 months, are now showing signs of fatigue.

Amidst a broader market pullback, investors appear to be fleeing riskier corners of the market.

No IPO, No Catalyst

After a stellar 18-month run, crypto equities are beginning to lose momentum relative to Bitcoin, according to the latest report shared by Matrixport. The 10x Research Crypto Stocks Index surged as much as 500% during the period, far outpacing Bitcoin’s 117% gain.

However, recent corrections in key names like Strategy, Coinbase, and Metaplanet have pushed the index lower, which is now resting at 427%. Adding to the slowdown, Circle’s IPO, which was initially well-received, failed to sustain investor demand, which evidenced fading enthusiasm for new listings.

Institutional activity also appears subdued. This could be in part due to the seasonally weaker summer months, which have left the sector without strong catalysts. With no significant crypto IPOs on the immediate horizon, Matrixport believes that equities may enter a consolidation phase, even as Bitcoin maintains steadier performance.

Crypto equities faced another difficult session on August 20. In fact, today’s trading saw Strategy and Coinbase both retreat further in line with a broader risk-off mood. Coinbase (COIN) fell around 2% in early trading to $296 Strategy (MSTR) slipped even further, declining 2% to $330. USDC issuer, Circle (CRCL), also slid 3.62% to $130.34, and lost nearly $5 during the same period.

Cautious Market

Over the last 24 hours, the price of Bitcoin has decreased by 2% to a level slightly above $112,500, while Ethereum managed to recover from its nosedive and now sits at $4,300.

QCP Capital observed that all eyes are on Fed Chair Jerome Powell’s upcoming remarks scheduled during this week’s Jackson Hole symposium, as his guidance will shape the direction of monetary policy amid the delicate balance between easing inflation and rising labor risks.

Despite positive developments in the crypto industry, such as the passage of the GENIUS Act and institutional adoption exceeding $100 billion, the recent sell-off indicates that short-term positioning remains fragile.

According to the firm, risk assets could experience further volatility if Powell delivers a hawkish message or if labor and inflation data come in stronger than expected.