Grayscale, which has multiple products in both Bitcoin and Ether ETFs, has published a new crypto report called “Summer storms”. The report, which stated that the summer months were challenging for cryptocurrency markets, especially touched on the declines in August.
“Among major crypto assets, Solana was a notable outperformer.”
In this part of the report, it was emphasised that the US employment figures for July were weaker than expected and the unemployment rate increased similar to past recessions. It was written that all these factors had a serious impact on cryptocurrencies, Ether also stood out in this sense, but Bitcoin and Solana endured:
“Fears of a cyclical downturn contributed to weaker performance from cyclical assets like equities, and strength in traditional safe havens like U.S. Treasury bonds, the Japanese Yen, and the Swiss Franc. Non-U.S. stocks and strategies that short U.S. equity volatility performed especially poorly. Bitcoin and Ethereum both declined; while Bitcoin held up relatively well on a risk-adjusted basis, Ethereum underperformed both other crypto assets and many traditional market segments, which we explore further below. Among major crypto assets, Solana was a notable outperformer.”
“Ethereum’s underperformance has been actual and anticipated selling”
Grayscale analysts, who attributed the reason for the decline in Ether to the sales of especially large companies and the loss of confidence of investors, used the following statements:
“Ethereum’s underperformance has been actual and anticipated selling from a few large holders, including market maker Jump Crypto; venture capital investor Paradigm; and the Golem Network. While the exact amount of selling cannot be determined, based on data from analytics platform Arkham Intelligence, Grayscale Research estimates that these entities collectively held about $1.5 billion worth of Ethereum before they began moving tokens (based on Ethereum prices at that time). A decline in the number of active validators and an increase in Ethereum’s staking reward rate also point to movement in relatively sticky token supply, which may be weighing on market sentiment.”
“Bitcoin to retest its all-time high price later this year”
Analysts claimed that if the US overcomes the recession barrier and provides a “soft landing”, Bitcoin could reach new highs towards the end of the year:
“If the U.S. economy avoids recession and remains on a path to a “soft landing,” Grayscale Research expects token valuations to rebound and Bitcoin to retest its all-time high price later this year.”
“Money printing could come back”
Analysts also stated that in case of economic weakness, policymakers may resort to money printing and spending, which may increase demand for assets such as Bitcoin.