Bitcoin and the broader cryptocurrency market are experiencing significant losses in August, despite a rebound in global stocks and other asset classes.

The largest digital asset has fallen approximately 9% this month, underperforming compared to MSCI Inc.’s world share index, which has gained nearly 1%

Bitcoin and the broader cryptocurrency market are facing significant challenges in August, even as global stocks and other asset classes experience a rebound.

While the largest digital asset has fallen approximately 9% this month, MSCI Inc.’s world share index has gained nearly 1%, and gold prices have surged to record highs. A Bloomberg global bond gauge has also increased by nearly 2% over the same period.

Bitcoin Prices Drop as US Gov’t Prepares to Sell Confiscated Crypto

One key challenge for digital assets is the potential sale of Bitcoin seized by the US government, which could put further downward pressure on prices.

According to estimates, the US government holds roughly $12 billion in confiscated crypto. Recent blockchain data shows that $600 million of confiscated Bitcoin was moved to a Coinbase Global Inc. wallet last week, as reported by Arkham Intelligence.

“The confiscated crypto is slowly being moved. We saw the first batch of roughly $600 million in confiscated Bitcoin being credited to Coinbase last week,” said Khushboo Khullar, venture partner at Lightning Ventures, in an email to CoinDesk.

“This is likely impacting prices, but given the smaller amounts of crypto being sold back into the market, the impact should be minimal and short-lived.”

Top 100 Digital Assets Index Sees Steepest Decline Since November 2022

The CoinDesk top 100 digital assets index saw its steepest drop on August 5 since November 2022, coinciding with a broader market pullback amid concerns over US growth and the unwinding of yen carry trades.

While expectations for the US economy have stabilized, leading to a near-record high in MSCI’s global share index, market sentiment appears to be remaining weak in the crypto realm.

Funding rates for Bitcoin perpetual futures on the Binance exchange – often used by speculators – are at their most negative since 2022, indicating diminished enthusiasm among fast-money traders.

“The crypto market has been experiencing outflows in August, with the top 100 index down 6% and Bitcoin down 9%,” said James Butterfill, head of research at CoinShares, in an email to CoinDesk.

“Speculative sentiment has also worsened, with Binance perpetual funding rates turning negative for the first time since 2022, indicating fast-money traders are now speculating on lower prices.”

Bitcoin’s peak of $73,798 in March was driven by expectations of looser US monetary policy and inflows into dedicated US exchange-traded funds (ETFs).

However, interest in these ETFs has cooled in recent months, and the ongoing US presidential race is introducing further uncertainty.

While Republican Donald Trump is known for his pro-crypto stance, Democratic opponent Vice President Kamala Harris has yet to outline her position on digital assets.

By afternoon in New York, Bitcoin had dipped 2% to around $58,600, while other major tokens like Ether and Solana were also experiencing declines.

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