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▲ Ethereum (ETH), Bitcoin (BTC) ©Godasol
Although the U.S. stock market reached new all-time highs, Bitcoin (BTC) and Ethereum (ETH) traded sideways around $64,000 and $1,800, respectively. It appears that internal cryptocurrency issues such as regulatory uncertainty, security incidents, and weakening institutional demand are weighing more heavily on the market than macroeconomic tailwinds.
According to investment media outlet FXStreet on August 5 (local time), expectations of a U.S.-Iran agreement to reopen the Strait of Hormuz and optimism about artificial intelligence (AI) investments pushed the U.S. stock market to an all-time high, but major cryptocurrencies failed to join the upward trend. Analysis suggests that the divergence between traditional risk assets and cryptocurrencies has become increasingly clear since 2026.
Over the past six months, Bitcoin recorded correlation coefficients of -0.04 with the US100 (U.S. tech stock index) and -0.16 with the US500, showing virtually no significant linkage. In contrast, its correlation coefficient with gold was relatively high at 0.64. This implies that geopolitical uncertainty and unique cryptocurrency variables had a greater impact on price than risk appetite. If cryptocurrencies do not rise even after the Hormuz Strait agreement is finalized, it could signal that investment demand is concentrated in other assets.
Regulatory uncertainty is also pressuring the market. The U.S. crypto market structure bill, the Clarity Act, is deadlocked in the Senate due to debates surrounding ethical provisions related to President Donald Trump's cryptocurrency businesses. With calls for a U.S. Securities and Exchange Commission (SEC) investigation into the TRUMP memecoin, expectations for the bill's passage before the August recess have also weakened.
The loss of over 1,755 Bitcoins, approximately $110 million, from thousands of wallets due to an attack exploiting a Coldcard wallet vulnerability also damaged investor sentiment. In its financial restructuring process, Strategy sold an additional $105 million worth of Bitcoin and issued $291 million worth of common stock. While the amount sold is small compared to its approximately $56 billion Bitcoin holdings, it added supply pressure to a sluggish market.
However, in July, Bitcoin rose 7.2% and Ethereum rose 18.2%, ending two consecutive months of decline. Bitcoin spot ETFs also turned from a net outflow of approximately $4.6 billion in June to a net inflow of approximately $172 million in July. Nevertheless, considering the slowdown in institutional participation, reduced liquidity, and seasonal weakness in August, Bitcoin is likely to trade between $62,000 and $66,500 for the time being. A breakout above $66,500 would open the way to the 200-day Simple Moving Average (SMA) of $70,000, while $60,000 serves as a key support level on the downside.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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